Franklin, Andrews, Kramer & Edelstein

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Resource and staff shortages constrain growth and drive up costs at manufacturers in July

IHS Markit / CIPS UK Manufacturing PMI®

KEY FINDINGS

* UK Manufacturing PMI at 60.4 in July (63.9 in June)

* Output and new order growth ease to four-month lows

* Stretched supply chains lead to sharp rise in costs

The UK manufacturing upturn remained solid in July.
Although rates of expansion in output and new orders slowed,
they remained among the best in the survey history amid
robust sales to both domestic and export clients. Scarcities
remained a prime concern, however, as stretched supply
chains and staff shortages were constraints preventing faster
growth of output and employment.

The seasonally adjusted IHS Markit/CIPS Purchasing
Managers’ Index® (PMI®) posted 60.4 in July, down further
from May's record high of 65.6. The PMI has signalled
expansion for 14 months. Growth slowed across the
consumer, intermediate and investment goods industries.
Manufacturing production rose for the fourteenth consecutive
month in July, as companies benefited from increased new
order intakes, rising client confidence and the re-opening
of the economy. New business inflows reflected stronger
demand from domestic and overseas markets. There were
also reports of clients bringing forward purchases to guard
against supply-chain issues. That said, rates of growth in
both output and new work both eased to four-month lows.
July saw a further increase in new export business. The
investment goods sector saw by far the steepest increase.
Companies reported improved demand from the US, the EU,
China, Russia and the Middle-East, although some noted
that Brexit issues constrained exports to the EU.
Scarcities, shortages and price rises remained prominent
challenges faced by UK manufacturers during July.
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