Manufacturing growth remains robust as signs point to easing supply chain issues

Britain’s manufacturing sector has grown at a faster pace than previously thought in December amid signs that the supply chain crisis may finally ease, new figures show.

The IHS Markit CIPS Manufacturing Purchasing Managers (PMI) Index reached 57.9 last month.

This was higher than the initial so-called flash PMI reading of 57.6, although slightly lower from the three-month high of 58.1 recorded in November.

Any score above 50 on the index represents the growth of the sector.

Although supply chains remain very tight, there are at least signs that the situation is stabilizing, with supplier delivery times stretching to the lowest extent in a year in December

Rob Dobson, Director of IHS Markit

The report signals a welcome improvement in the supply chain issues that have plagued the industry and the economy at large since the summer, with a slight decrease in supplier delivery delays.

This helped cool the surge in input prices for UK factories a bit, but not enough to stop factory outlet selling prices from skyrocketing to a new high as companies passed higher costs on to customers.

The report also warned that continued supply chain pressures and staff shortages “continue to hamper the overall pace of expansion.”

Rob Dobson, Director of IHS Markit, said: “Although supply chains remain very tight, there are at least signs that the situation is stabilizing, with supplier delivery times getting longer as the market continues. lower for a year in December.

“This helped moderate some of the increases in input prices, but cost inflation remained high enough to necessitate the largest increase in ex-factory selling prices on record.”

Samuel Tombs, UK chief economist at Pantheon Macroeconomics, has warned that hopes of an imminent end to supply chain problems may be dashed as the resurgence of Covid disruption and Brexit “will reverse recent progress.”

“Supply chain disruptions … are likely to worsen this month, as Brexit customs controls have been tightened and Omicron will likely lead to further plant closures in Asia,” he said. he declares.

The PMI report showed output growth improved to a four-month high in December, with new business across the UK picking up.

But he added that exports were affected at the end of the year by Brexit-related issues, as well as concerns over further restrictions on Covid in the UK and abroad.

Employment jumped for the 12th consecutive month in December, as businesses continued to hire to deal with staff shortages, as well as a surge in new orders.

The Chartered Institute of Procurement & Supply (CIPS) also said purchases by supply chain managers hit a four-month high in December as companies tried to beat another near-record inflation rate for consumers. raw materials and ordered in advance.

Higher costs were reported for chemicals, electronics, energy, food, metals, lumber and lumber, while freight and transportation costs were also higher, according to the report. .

But despite the pressures on costs and logistics, the industry was bullish as it showed the majority of companies (63%) expected production to increase over the next 12 months.

Marjorie N. McClure