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The IHS Markit/CIPS manufacturing PMI's output index, which
measures month-on-month changes in production volumes, fell from
61.1 to 57.1 between June and July, according to the provisional
'flash' data. With the index above 50, the survey continued to
signal expansion, but the decline in the index indicated the
weakest production growth since March.
Analysis of the replies provided by those manufacturers
reporting lower production volumes in July highlights a growing
impact of COVID-19 and staff shortages, though material shortages
remain the most common cause of lost output.
Of those giving a reason for falling production, one-in-three
(34%) attributed the decline to a shortage of raw materials and
components, which in turn were blamed on a combination of the
pandemic and Brexit-related supply disruptions. As a proportion
that was down from 44% in June, though the actual number of
companies reporting shortages was only marginally lower.
The survey also showed that supply delays continued to develop
at a pace rarely witnessed over almost 30 years of survey history,
according to the
suppliers' delivery times index - an important barometer of
capacity constraints and inflationary pressures.
An additional 14% reported that production was curbed by a lack
of staff, in many cases also attributed to COVID-19, with employees
either ill with the virus or unavailable to work due to isolation
rules, though others simply noted difficulties filling
vacancies.
At the same time the proportion blaming lost output on COVID-19
in general jumped from 7% in June to 16% in July, with companies
often citing the rise in infection numbers associated with the
Delta variant.
One-in-four (24%) meanwhile reported that lower production was
caused simply by weakened demand, with 6% citing lower exports.
Contact PMI@ihsmarkit.com for further information.
Chris Williamson, Chief Business Economist, IHS
Markit
Purchasing Managers' Index™ (PMI™) data are compiled by IHS Markit for more than 40 economies worldwide. The monthly data are derived from surveys of senior executives at private sector companies, and are available only via subscription. The PMI dataset features a headline number, which indicates the overall health of an economy, and sub-indices, which provide insights into other key economic drivers such as GDP, inflation, exports, capacity utilization, employment and inventories. The PMI data are used by financial and corporate professionals to better understand where economies and markets are headed, and to uncover opportunities.
