UK manufacturing growth eases amid supply chain issues, labour shortages

UK manufacturing growth eased to a seven-month low in September amid supply chain issues and labour shortages, according to a survey released on Friday.
The IHS Markit/CIPS manufacturing purchasing managers’ index fell to 57.1 from 60.3 in August. Still, it came in above the preliminary reading of 56.3.

A reading over 50.0 indicates expansion, while a reading below signals contraction.

The survey showed that production schedules were disrupted by a input shortages, longer supplier lead times and capacity constraints, including difficulties with staff shortages and hiring required skills.

Average vendor lead times increased to one of the greatest extents in the survey’s history, amid reports of delays to air, land and sea freight, staff shortages at vendors, Covid-19 and Brexit disruptions, a lack of delivery drivers and port delays.

Duncan Brock, group director at the Chartered Institute of Procurement & Supply, said: “Manufacturing activity in September was crammed with obstacles to succeed as supply disruptions continued to dampen growth for a fourth month in a row. Smaller businesses were impacted the most as reduced resources in supplies and drivers, made trade more unmanageable as we move towards the last quarter of the year.

“New orders growth slowed again compared to May’s high from both domestic and overseas customers as the Brexit and covid-related long delivery times and accelerating costs contributed to a reduced eagerness to commit. Customers were becoming impatient with sluggish production times from UK businesses, opting to source for more efficiency elsewhere.”

Brock said prices for raw materials and skilled staff continued to soar, as 99% of the survey’s supply chain managers said prices had either gone up or stayed at elevated rates.

“These high costs of doing business are affecting jobs, as skilled labour remained both elusive and expensive, leading to the lowest rise in job creation since the beginning of the year.”

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