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01 Feb 2021 | 09:34

UK manufacturing growth slows to three-month low in January

(Sharecast News) - UK manufacturing growth slowed to a three-month low in January, dented by further Covid-19 restrictions, according to a survey released on Monday. The IHS Markit/CIPS purchasing managers' index declined to 54.1 from a three-year high of 57.5 in December, when manufacturers stockpiled ahead of the UK's exit from the European Union. Still, this was ahead of a preliminary reading of 52.9.

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

Output growth eased and new orders fell slightly as producers faced weaker inflows of new export work and temporary supply-chain disruptions caused by the pandemic and transport delays, particularly at ports, following the end of the Brexit transition period.

Rob Dobson, director at IHS Markit, said: "Whereas many countries are seeing manufacturers provide a much-needed support to economic growth as the service sector is hit by Covid-19, the UK's manufacturing sector has come close to stalling.

"A mixture of harsher Covid-19 restrictions and Brexit led to near-record supply-chain disruptions, lower exports and increased costs. The impact was felt most at consumer goods producers, who reported steep falls in output and new orders. There were also early signs that smaller companies were being hit harder by the tougher operating environment than medium- and larger-scale producers.

"The hope is that the current constraints will start to ease once Covid-19 restrictions are lifted, vaccines are rolled out and ports, suppliers and manufacturers adapt to the new trading environment post-Brexit."

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