Supply chain woes stunt UK manufacturing growth in August -PMI By Reuters

© Reuters. FILE PHOTO: Technicians work on a Rolls-Royce engine prior to it being installed in a car on the production line of the Rolls-Royce Goodwood factory, near Chichester, Britain, September 1, 2020. REUTERS/Peter Nicholls

LONDON (Reuters) – British factory output grew in August at the weakest rate for six months as supply chain problems weighed on manufacturers’ recovery from the COVID-19 pandemic, a survey showed on Wednesday.

The IHS Markit/CIPS UK Manufacturing Purchasing Managers’ Index fell to 60.3 last month from July’s 60.4, slightly higher than a preliminary reading of 60.1.

While still far above the 50 mark that denotes growth, the reading was again flattered by supply chain delays which in normal times reflect strong demand.

Global shipping problems, tight supplies of semiconductors and shortages of some goods such as motor vehicles have contributed to rising inflation in many countries – including in Britain.

Despite a healthy influx of new orders, IHS Markit’s gauge of British factory output slid to its lowest level since February. The slowdown was evident especially in producers of intermediate goods, who often sit in the middle of supply chains.

Survey respondents said supplier delays had been caused by a shortage of materials, shipping delays, port bottlenecks, Brexit and a shortage of logistics industry staff – all contributing to rising costs.

Last month a separate survey of small- and medium-sized manufacturers showed nearly all are struggling with cost pressures.

Wednesday’s survey showed manufacturers remained upbeat nevertheless, as the survey’s gauge of future output rose to a three-month high.

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