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UK manufacturers reported growth at a record pace in May, according to a closely watched survey that will add to reasons for economic optimism.
The survey of hundreds of purchasing managers indicated a rapid pick-up in orders and employment. Surveys manufacturers in Germany and France, strong growth was also reported, with companies increasing production to meet growing demand.
The IHS Markit / CIPS Purchasing Managers Index fell from 60.9 in April to 65.4 in May, the highest in the survey’s three-decade history. Any reading above 50 indicates growth.
Manufacturers reported a record increase in new business as domestic and foreign demand continued to recover.
Businesses have linked the growth in new orders to growing business confidence, the further reopening of the UK economy and reduced problems with Covid-19.
Economists view PMI surveys as a good early indicator of future growth.
IHS warned that companies were also reporting supply issues as they struggled to keep up with growing demand. Backlogs and delivery times to manufacturers both increased in May. To cope with the extra work, companies said they were hiring new staff at the fastest rate on record.
Companies particularly highlighted shortages of electronics, plastics and metals, as well as delays in transportation. The problems have caused manufacturers to increase their prices.
IHS Director Rob Dobson said: “The UK PMI hit an all-time high in May, as record growth in new orders and employment supported one of the largest increases in production volumes since. almost 30 years.
Growth is being boosted by the unblocking of economies from Covid restrictions and ongoing vaccination programs. This is being felt around the world, as shown by a record increase in new export activity in the last month of this year. ‘investigation.”
Duncan Brock, Group Director at the Chartered Institute of Procurement & Supply, said: “The continued increase in the number of jobs was an attempt to build capacity to respond to this surge as backlogs grew sharply and deadlines for delivery were reaching unsustainable levels, resulting in further progress. in the execution of orders.
“The manufacturers walk turned into a sprint as the lockdowns were removed, but we haven’t seen this level of material price inflation in decades.”