The UK's manufacturing sector has finally turned a corner, ending a 20-month slump and returning to growth as companies see a rise in orders and production.
The S&P Global/CIPS UK manufacturing PMI survey hit 50.3 in March, up from 47.5 in February. Any score above 50 indicates growth, and this is the first time since July 2022 that the PMI has risen above that level.
"The end of the first quarter saw UK manufacturing recover from its recent doldrums," said Rob Dobson, director at S&P Global Market Intelligence. "Production and new orders returned to growth, albeit only hesitantly, following year-long downturns, with the main thrust of the expansion coming from stronger domestic demand."
The survey found that there was still a "weak" trend in new export orders, with demand from overseas falling for the 26th month in a row. However, the rate of decline has slowed since April last year.
Production increased for the first time since February 2023, with the consumer goods sector offsetting downturns elsewhere. Customers are starting to restock their shelves, the survey said.
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"The upturn in demand also led to improved confidence among manufacturers, with positive sentiment hitting an 11-month high," Mr Dobson said. "Some 58% of companies expect their output to rise over the coming year."
"We're also seeing signs of stabilisations in employment and purchasing activity alongside a move towards lowering safety stocks, all signs that manufacturers are tentatively optimistic about the road ahead. Potential blockers remain such as continued weak export performance and supply chain stresses, with the neighbouring EU market the main drag on overseas demand and the Red Sea crisis still impacting supply chains."
"Signs from the survey that the impact of both of these factors is easing is therefore welcome news."
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