10:49 am, August 3, 2020
UK manufacturing grew for the second month in succession in July thanks to furloughed staff returning to work, but car production is still struggling
The IHS Markit/CIPS manufacturing purchasing managers’ index (PMI) hit a score of 53.3 last month, compared to 50.1 in June.
Consumer and intermediate good industries performed the strongest and the PMI score hit a 16-month high.
Lockdown measures easing and furloughed staff returning to work are being given as reasons for the positive rise.
Rob Dobson, director at IHS Markit said that the sector is on a ‘much firmer footing’ as it goes into the third quarter of the year, as furloughed staff come back onto the production lines.
However, he warned that it would take a long time to reach the pre-crisis levels.
‘Despite the solid start to the recovery, the road left to travel remains long and precarious,’ Dobson said.
‘An extended period of growth is still needed to fully recoup the ground lost in recent months. This is also the case for the labour market, where job losses are continuing despite businesses reopening.
‘There is a significant risk of further redundancies and of furloughed workers not returning unless demand and confidence stage more substantial and long-lasting rebounds in the months ahead.’
Steve Harris, head of manufacturing and industrials at Lloyds Bank, said: ‘It’s encouraging to see growth again after June’s reading barely nudged into positive territory, but the caveat remains that this is a rise from an extremely low base.
‘New orders rising shows some momentum is beginning to build behind a wider recovery, and it will be important to sustain this to underpin further growth. However, some stockpiling will be a contributing factor here as firms prepare for the big unknown of possible second waves of coronavirus and also the end of the Brexit transition period in December.’
Car and plane manufacturing are still struggling, however, dealing a major blow to the economies of the south west, midlands and the north east.
Latest data from the Society of Motor Manufacturers and Traders (SMMT) showed car manufacturing had slump to its lowest level since 1954.
Car production in June dropped by nearly half – 48.2 per cent – compared with June 2019, with 56,594 units made.
The figures sparked the SMMT to call for a Brexit trade deal to stem job losses which have already totalled more than 11,000 over the past six months.
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