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Manufacturing sector in UK records severe decline amid COVID-19 crisis

Manufacturing sector in UK records severe decline amid COVID-19 crisis
Manufacturing sector in UK records severe decline amid COVID-19 crisis

The HIS Markit/Cips purchasing manager’s index (PMI) in the U.K. reportedly plunged to 47.8 in March 2020, a three month low. A growing COVID-19 pandemic has had a massive impact on the manufacturing sector in the country as it has brought down production amid lockdowns.

Cips’ group director, Duncan Brock stated that the factories in the U.K. have been experiencing the most somber trading situations since records for the PMI began. The bad performance of the entire manufacturing sector had resulted in major job losses first time after 2009. The current pandemic has imposed a halt in movements which has led business optimism to slump down to its lowest level on the record.

The supply-chain disruptions were the main problem of the sector. Consistent transport delay and material shortages have led to the sharpest rise in the vendor lead times within the 28-year history of PMI. This had caused a significant delay in production. Any PMI score below 50 suggests that the sector is contracting.

New orders as well as the output had fallen, with contractions ostensible in consumer investments and intermediate goods sub-sectors.

HIS Markit’s director, Rob Dobson commented that the hit was recognized in most manufacturing areas as the output fell sharply in every important industry, with the exceptions of pharmaceuticals and food production. While the transport sector, that included the carmakers who are already struggling, has been suffering the steepest low.

According to reliable sources, it has been suggested that the sector is in a worse situation than what the PMI indicates. Pantheon Macroeconomics’ chief UK economist Samuel Tombs has said that the PMI has been greatly understating the pace of the fall that is happening across the manufacturing sector. For instance, the PMI has been impacted perversely by the disruption of the supply chain.

He continued that the customers have been axing any discretionary expenditure in the COVID-19 hit situation, that will make the manufacturing sector suffer more.

 

Source Credit- https://www.cityam.com/uk-manufacturing-sector-slumps-as-coronavirus-hits-supply-chains/