Back in the UK, the factories recorded their fastest growth since at least the 1970s.

Manufacturing activity has improved dramatically with the reopening of the UK economy, with production volumes in the three months to June growing at the fastest rate on record.

That’s according to CBI’s latest manufacturing health check.

The balance of companies reporting higher production volumes jumped to +37 this month, with about 52% up and just 16% down. This shows the fastest growth since the survey began in July 1975, and is up from +18 in May.

CBI Economy
(@CBI_Economics)

UK #manufacturing production volumes in the three months to June increased at the fastest rate on record (since 1975). Businesses expect production to increase at a rapid, albeit slightly slower pace, over the next quarter.

Note on graph: Outcome questions were first asked on a monthly basis in 1995 pic.twitter.com/O86NgnThqX


June 22, 2021

The recovery appears to be widespread, with an increase in production in 15 of the 17 sub-sectors, driven by “motor vehicles and transport equipment” and “food, beverages and tobacco”.

Encouragingly, manufacturers expect production to continue growing at a decent pace in the next quarter (a balance of +33 predicting higher production volumes).

Companies reported that total order books in June were at their highest level since 1988.

However, 27% of companies said that Export order books were below normal, while only 19% were above normal. This gives a balance of -8, which is the best reading since April 2019.

Martin sartorius
(@SartoriusMartin)

It’s great to see the manufacturing business take off in our latest #HIS as the UK economy reopens
🟢 The fastest production growth since 1975
🟢 Highest total order books since 1988
🟢 Strongest export order books since April 2019 https://t.co/QonmtWJWhi


June 22, 2021

CBI Economy
(@CBI_Economics)

Improving manufacturing demand conditions were also manifested in total order books in June reaching their strongest result since 1988, while export order books improved to their strongest level in June. more than two years pic.twitter.com/XzFGscNWt4


June 22, 2021

But the survey also shows that the disruption of the supply chain is causing problems.

More and more companies have warned that their stocks of finished goods are below “adequate” levels, with inventory adequacy deteriorating to its lowest level on record (since 1977).

CBI Economy
(@CBI_Economics)

Manufacturers reported that inventory adequacy in June deteriorated to its lowest level on record (since 1977) pic.twitter.com/a6BULf2HUz


June 22, 2021

Having been hit by rising commodity prices and other costs, companies also expect to increase their own prices in the coming months.

About 48% of the companies surveyed planned to increase production prices in the next quarter, while only 2% expected a reduction. This gives a balance of +46, the highest expectations since January 1982.

CBI Economy
(@CBI_Economics)

Producer prices are expected to rise rapidly in the next quarter, with this month’s result marking the highest expectations since 1982 pic.twitter.com/cExbhQVwM7


June 22, 2021

Tom crotty, group director at INEOS and chairman of the CBI Manufacturing Council, said companies are also struggling to hire staff:


“It is extremely reassuring to see the manufacturing sector doing well after a particularly difficult start to the year. There is a real sense of optimism from many in the industry that there are good times ahead.

The picture is not all rosy, however, as companies continue to face challenges resulting from supply chain disruption and cost pressures. Staff shortages are also causing problems for many companies. It will be essential for the government to continue working with manufacturers to address these issues if the strong performance of the sector is to be sustained over the long term.





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