UK manufacturing output and new orders fall at quickest rates since mid-2012

The outbreak of coronavirus and subsequent mitigation efforts across the world has led to a substantial contraction of UK manufacturing production during March, as figures in the IHS Markit/CIPS PMI found.

Output fell to the greatest extent since July 2012, following a similarly severe reduction in intakes of new business.

The impact was also felt in the labour market and through supply chains.

Transports delays and shortages of raw materials led to the steepest increase in vendor lead times in the 28-year survey, further disrupting production.

The PMI fell to a three-month low of 47.8 in March, down from 51.7 in February, and the flash estimate of 48.0.

Manufacturers reported that disruption resulting from the coronavirus outbreak, lower market confidence, and company shutdowns had all contributed to the drops in production and new business.

Rob Dobson, Director at IHS Markit, said: “The latest survey numbers underscore how the global outbreak of coronavirus is causing huge disruptions to production, demand, and supply chains at UK manufacturers.”

“Output and new orders fell at the fastest rates since mid-2012, while supplier delivery times lengthening to the greatest extent in the survey’s history as shortages grew more widespread.”

“The resulting job losses took the rate of decline in employment to its highest since July 2009.”

“The effects were felt across most of manufacturing, with output falling sharply in all major sectors except food production and pharmaceuticals. The transport sector, which includes already-beleaguered carmakers, suffered the steepest downturn.”

“With restrictions aimed at slowing the spread of the virus expected to stay in place for some time, expectations of further economic disruption and uncertainty meant business optimism slumped to a series-record low.”

“However, on a more positive note, manufacturers still expect to see output higher in one year’s time.”

Seamus Nevin, Chief Economist at Make UK, said: “Today may be April Fool’s Day, but this result is no joke. A PMI score of 47.8 amid the ongoing coronavirus outbreak is a sign of just how hard manufacturers have been hit.”

“Many firms have had to shut and lots of those that that remain open have seen orders or output suffer. Other have switched to making products that are vital to the national attempt to stop the spread of the virus, a testament to why backing manufacturing is so important.”

“At the start of this year, manufacturing companies reported unprecedented optimism about investment and trade but that has all been swept away by current events.”

“With estimates suggesting up to a fifth of smaller firms could go out of business in the next few months, coronavirus has highlighted the need to maintain and develop our domestic manufacturing base.”

“The Chancellor has rightly intervened to help but even still costs are still going up. A 6.2 per cent increase in the national living wage came into effect this morning, with expectations of further restrictions and economic disruption to come.”

“Business optimism is at a record low and may continue to worsen in the months ahead.”