UK manufacturing slumps as supply chains see “substantial disruption”

UK manufacturing supply chains were victim of “substantial disruption” in April, with production, new orders and employment all contracted at the fastest rates in recorded history, while lead times lengthened to their highest in 28 years.

According to the latest IHS Markit/CIPS Purchasing Managers’ Index the global pandemic also hit overseas demand for UK manufacturers, leading to a series-record drop in new export business.

IHS Markit director Rob Dobson, said that huge swathes of industry were hit hard by company closures, weak global demand, lockdowns and social distancing measures in response to Covid-19 and the only pockets of growth were seen at firms making medical and food products.

“Supply-chains also felt the full force of the outbreak as average supplier delays rose to the greatest extent seen since PMI records began,” said Dobson. “International goods flows were constrained by delays in air freight, shipping and border control issues, and staff shortages often limited production.”

Dobson said that the outstanding question that remained was how long the current restrictions would need to remain in place, and which sectors can start to safely reopen.

“The pressure is mounting, as the longer the global economy remains in lockdown the greater the cost to industry will grow, and the greater the likelihood that more jobs will be cut.”

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The PMI fell to a record low of 32.6 in April, down from 47.8 in March.

Duncan Brock, group director at the Chartered Institute of Procurement & Supply (CIPS), said that the manufacturing sector took an abrupt nosedive into the red with purchasing activity, production and new orders falling at the fastest rates in nearly 30-years.

“The coronavirus pandemic affected supply chains from beginning to end. Domestic customers deferred orders and export customers thrashed around trying to source a dwindling number of raw materials to keep their supply chains operating before finally giving up.”

Brock warned that with the expectation of potential price rises to come, some firms had resorted to stockpiling measures in an attempt to beat future “supply pandemonium” which he believed had only exacerbated the problem of dysfunctional supply chains”.