Britain’s manufacturing sector grew at its fastest pace ever in May, amid more signs that the economy is recovering from the chaos of the coronavirus.
The closely monitored IHS Markit/CIPS Purchasing Managers’ Index – PMI – reached 65.6 last month.
That surpassed the previous record of 61 set in 1994 – with anything above 50 in the index representing expansion.
Despite the staggering number, some analysts had thought it could be even higher as the economy surges following the catastrophic impact of lockdown restrictions.
The latest boost for Rishi Sunak comes after the OECD revised its forecast for UK GDP growth to 7.2 percent this year and 5.5 percent in 2022, and applauds the success of the vaccination rollout.
However, fears are growing that lifting the restrictions on June 21 could be delayed due to an increase in infections caused by the Indian variant.
Commenting on the latest PMI figures, IHS Markit Director Rob Dobson said: “The UK PMI rose to an all-time high in May as record growth in new orders and employment marked one of the strongest increases in production volumes in the nearly 30-year-old year-old research supported history.
“Growth is fueled by unlocking economies from COVID restrictions and ongoing vaccination programs. This is being felt around the world, as evidenced by a record surge in new export activity during the last month of research.”
The closely monitored IHS Markit/CIPS Manufacturing Purchasing Managers’ Index – PMI – reached 65.6 last month
The latest boost for Rishi Sunak (pictured) comes after the Organization for Economic Co-operation and Development (OECD) improves the UK’s outlook
The OECD expects UK GDP to grow at 7.2 per cent this year and 5.5 per cent in 2022, due to the success of the vaccine roll-out and the easing of lockdown restrictions
Sarah Banks, Managing Director of Freight and Logistics at Accenture Global took a more cautious tone, saying: ‘Business optimism is not without its challenges’.
“Material shortages and shipping delays are still widely reported, leading to significant backlogs of unfinished work as businesses struggle to increase operational capacity to accommodate the rising influx of new orders,” she said.
“This has resulted in shipping and air freight rates and retail price inflation being significantly higher than ever before.
“With the economy recovering faster than expected, manufacturers are likely to feel supply chain bottlenecks that have so far only bubbled beneath the surface of global trade.”
The OECD said yesterday that growth in the UK was being driven by a ‘revival in consumption, especially of services’, with GDP expected to return to pre-pandemic levels by early 2022.
That would align the recovery with Canada and Italy, ahead of France but behind Germany, Japan and the United States.
While the OECD viewed the recovery positively, the OECD said the UK could still experience the largest decline in potential output growth from the G7 countries on average, compared to relatively small losses in Japan, Canada and the United States.
The decline in potential output growth in key euro area members could average 0.3 percentage points per year over the 2019-22 period, the report said.
“The UK could experience the biggest drop in the G7 countries (down 0.5 percentage points per year), in part due to the additional supply-side adverse effects from 2021 post-Brexit.”
Mr Sunak said: ‘The strength of the UK growth forecast is evidence of the continued success of our vaccine rollouts and evidence that our Jobs Plan is working.
“It’s great to see some early signs that the UK is recovering from the pandemic, but with debt close to 100 per cent of GDP we also need to make sure that public finances stay in good shape.
“That’s why I set out in the March budget the steps we will take to bring debt under control in the medium term; make sure our future recovery is sustainable.”
The OECD also warned that the global recovery is in a “critical phase” and could be uneven due to disparities in vaccine distribution worldwide.
“Maintaining the pace of vaccinations and responding to emerging virus mutations are important challenges for the future,” the forecast added.
Turning to the global outlook, it has revised its growth forecasts for the world’s major economies since the last full outlook in December last year, bringing global GDP growth to 5.8 percent this year.
Chief economist Laurence Boone said the latest OECD forecasts could give “hope” to people in countries hard-hit by the pandemic, who will soon be able to return to work and live normal lives.
He added: “But we are in a critical phase of the recovery.
“Vaccination production and distribution must accelerate globally and be supported by effective public health strategies.
Stronger international cooperation is needed to provide low-income countries with the resources – medical and financial – needed to vaccinate their populations.
‘The trade in health products must be able to flow freely.’
The transnational organization said growth was driven by a “recovery in consumption, especially services,” and GDP is expected to return to pre-pandemic levels by early 2022.