UK Manufacturing Sector Growth Slows In January

The UK manufacturing sector growth slowed in January reflecting a slight fall in new orders as producers faced weaker inflows of new export work and temporary supply-chain disruptions caused by Covid-19 restrictions and transport delays following the end of the Brexit transition period.

The IHS Markit/ Chartered Institute of Procurement & Supply Purchasing Managers’ Index fell to a three-month low of 54.1 in January from December’s three-year high of 57.5, data showed Monday. However, the reading was well above the flash 52.9.

Declining new order intakes and a sharp fall in input stocks weighed on the PMI level.

Manufacturing output increased for the eighth straight month in January. However, the rate of expansion slowed to its joint-weakest during that sequence. New orders dropped due to the national lockdown, end of the Brexit transition period, client closures and renewed uncertainty.

Manufacturing employment rose for the first time in a year in January. But the rate of job creation was only marginal.

Input price inflation rose to a four-year high in January, reflecting raw material shortages, transport delays and market forces. At the same time, increased costs were passed on to clients, leading to the steepest inflation of selling prices for 28 months.

“The hope is that the current constraints will start to ease once COVID-19 restrictions are lifted, vaccines are rolled out and ports, suppliers and manufacturers adapt to the new trading environment post-Brexit,” Rob Dobson, director at IHS Markit, said.

If so, supply, demand and production bottlenecks should slowly work through the system and growth will not be knocked too far off course through 2021, Dobson added.

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