The sector remained beset by severe supply chain and logistic issues, however, leading to delivery delays from suppliers and disruption to production and distribution schedules.
Survey data was collected from 12-26 March and the seasonally adjusted IHS Markit/CIPS Purchasing Managers’ Index (PMI) rose to a decade-high of 58.9 in March, its best outcome since February 2011.
The PMI level was supported by improved growth of output, new orders and employment along with increased supplier lead times. A slower decrease in stocks of purchases also had a positive impact on the latest reading compared to one month ago.
Manufacturing output increased for the tenth successive month and at the quickest pace since last November. Solid and accelerated growth was signalled in both the intermediate and investment goods industries.
Consumer goods production returned to expansion following back-to-back contractions. Higher output was linked to improved new order intakes, the vaccine roll-out and preparations for the planned loosening of lockdown restrictions.
New business rose at the second fastest pace for over three years, with growth registered at consumer, intermediate and investment goods producers alike.
Companies reported improved demand from domestic and overseas clients, rising business confidence and customers ordering early to guard against potential price rises and further supply-chain disruption. New export business rose at the quickest pace in the year-so-far, amid reports of improved demand from Europe, Asia and the US.
The ongoing rebound in domestic and global economic conditions underpinned increased optimism and job creation at UK factories. Business sentiment was at its most elevated for seven years, hitting unsurpassed levels at both consumer and investment goods producers.
Almost two-thirds of manufacturers expect output to rise over the coming year (only 6% expect a contraction). Jobs growth was also at a seven-year high, supported by the sharpest rise in backlogs of work for 11 years.
Supply chain issues remained a constraint on UK manufacturers during March, disrupting raw material deliveries, production schedules and the onward distribution of finished goods to clients.
Vendor lead times lengthened to the second-greatest extent in survey history due to coronavirus disease 2019 (COVID-19) restrictions, low stocks at suppliers, port disruption, shipping delays, post-Brexit issues and raw material shortages.
With demand outstripping supply, input price inflation accelerated to a 50-month high. This also led to upward pressure on output charges, which rose at the quickest pace since January 2017.
Ginni Cooper, partner at MHA, believes that despite challenges posed by supply chain constraints and shipping delays, manufacturers are looking ahead optimistically as lockdown restrictions ease in the months ahead.
She added: “With today’s manufacturing PMI hitting its highest level in a decade, optimism amongst UK manufacturers is prevalent, with improved domestic demand envisaged as the country emerges from lockdown restrictions.
"That said, struggles to source raw materials, including for plastic products, steel and timber, accompanied by increased lead times in supply chains are putting constraints on the ability of some manufacturers to service demand.
“While it seems the initial commotion caused by Brexit has settled down, shipping delays are still an issue, not least because of recent disruptions in trade routes due to the Suez Canal incident last week.
"In addition, increased paperwork and administration has deterred some manufacturers from trading across borders and has led them to re-evaluate their supply chain arrangements, particularly where exports had been a minimal part of their business. On the flip side, this presents opportunities to other manufacturers that have perhaps been more prepared for the changes.
“Many UK manufacturers have continued to trade throughout lockdown, adapting their processes as appropriate. While the impact of the pandemic on jobs in the sector remains to be seen, as government support initiatives start to unwind, it is hoped the consequences for headcounts will be minimal.”
