Return to growth in UK manufacturing sector not a "flash in a pan"

(Alliance News) - The return to growth in the UK manufacturing, seen in the latest S&P Global UK manufacturing purchasing managers' index, could be the start of a more prolonged recovery, economists said on Tuesday.

The seasonally adjusted S&P Global UK manufacturing purchasing managers' index reading was 50.3 points in March, up from 47.5 in February, and beating the earlier flash estimate of 49.9.

The latest figure was above the 50-point no-change mark, meaning the UK manufacturing sector returned to growth territory.

S&P said that three of the PMI sub-components - new orders, output and suppliers' delivery times - were consistent with an improvement in overall operating conditions during March.

"The end of the first quarter saw UK manufacturing recover from its recent doldrums. Production and new orders returned to growth, albeit only hesitantly, following yearlong downturns, with the main thrust of the expansion coming from stronger domestic demand. The upturn in demand also led to improved confidence among manufacturers, with positive sentiment hitting an 11-month high," said S&P Global Market Intelligence Director Rob Dobson.

"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."

Pantheon Macroeconomics analyst Rob Wood commented: "The long downturn in manufacturing output is over according to the PMI...This isn't just a flash in the pan, with the forward-looking indications from the PMI suggesting growth will improve further.

"Expectations for growth in output over the next 12 months also improved to 75.9 in March from 73.5 in February, above their average level of 72.4 since this question was first asked in 2012 and the highest since April 2023."

Meanwhile, new orders rose to 50.2 in March from 45.4 in February, which, S&P Global reported, was centred on the domestic market, Wood pointed out.

By Jeremy Cutler, Alliance News reporter

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