Survey results from S&P Global on Tuesday revealed preliminary signs of recovery in British factory activity in March. Both output and new order counts were on the rise.
The Manufacturing Purchasing Managers' Index (PMI), adjusted for seasonal variations, climbed to a 20-month peak of 50.3 in March, an improvement from February's 47.5 figure. The preliminary score was 49.9, with any reading below 50 signifying sector expansion.
For the first time in over a year, manufacturing output saw an upturn. This was largely attributable to growth in consumer goods production, which counterbalanced downturns in intermediate and investment goods categories.
New business in March saw a slight uptick, majorly focused on domestic markets. In contrast, export orders fell for the 26th consecutive month, with the companies blaming less demand from mainland Europe, specifically France, the Netherlands, Belgium, and Poland.
Regarding prices, both input and output costs moderately increased in March, with a cost price inflation rate that was the most rapid in a year.
March also saw improvements due to delayed receipts and reduced purchasing endeavors to mitigate safety risks while ordering goods from supplier stocks and managing cash flows. Consequently, stocks of purchases were depleted.
The Suez Canal blockage aggravated vendor lead times with freight diversions and subsequent impacts on supply chains prolonging delivery times.
Despite a continual decrease in employment and purchasing activity levels, the contraction rates reduced significantly at the first quarter's end.
A majority of manufacturers remained optimistic about production prospects for the coming year, citing stronger demand signs, new product releases, an enhanced trading environment, export opportunities, and hopes for better cost and supply scenarios.
