The loosening of lockdown conditions corresponded with the UK manufacturing PMI stats hitting a 32-month high of output growth.
Manufacturers linked the easing of restrictions around Covid-19 to a strong July performance, which saw the sharpest rise in new order volumes since the end of 2018.
The figures, from the IHS Market/CIPS Purchasing Managers Index, rose to a 16-month high of 53.3 in July (June 2020: 50.1).
Manufacturers were able to restart or increase production with lockdown restrictions eased, however IHS Market warned that several months of growth were required to make up the lost output across the year.
While domestic demand was high, new export business fell for the 9th consecutive month. Employment sell for the sixth month in a row, however purchasing activity was raised for the first time since October 2019, with the report noting that “supply chain disruption continued”.
Overall, confidence was at its highest since March 2018; 62% of companies expected production to be higher one year from now.
Rob Dobson, Director at IHS Markit, which compiles the survey, said: “The UK manufacturing sector started the third quarter on a much firmer footing, with output growth hitting a near three-year high and new orders rising for the first time in five months. The recovery strengthened as a loosening of lockdown restrictions allowed manufacturers to restart or raise production. July also saw signs of furloughed employees returning to work and customers resuming spending. Business optimism also rose to its highest for over two years as companies grew more hopeful that the future has brightened.
"Despite the solid start to the recovery, the road left to travel remains long and precarious. An extended period of growth is still needed to fully recoup the ground lost in recent months. This is also the case for the labour market, where job losses are continuing despite businesses reopening. There is a significant risk of further redundancies and of furloughed workers not returning unless demand and confidence stage more substantial and long-lasting rebounds in the months ahead.”
Duncan Brock, Group Director at the Chartered Institute of Procurement & Supply: “The makers were on the march again in July as production started to flow more easily and businesses saw new orders rise at the fastest pace since the end of 2018. “Driven largely by demand from the domestic market, clients looked towards building more localised supplier bases as opportunities for trade were unblocked with the end of the UK’s lockdown. However, overseas customers failed to deliver any positive news. Export orders fell for the ninth month in a row, exposing the ongoing fragility of the broken global marketplace due to the pandemic.
“The employment situation also remained bleak, as job shedding continued and businesses re-modelled their strategies to the shrinking opportunities. With a ravaged economic landscape it will be a slow train to recovery, managing the ebbs of flow of potential disruptions to come.”