Truck shipping

UK factories face growing supply problems and staff shortages -PMI

British factories in September suffered their weakest month since February, when the country was still largely locked down, according to a survey that highlighted the impact of supply chain problems and staff shortages on manufacturers.

The IHS Markit / CIPS UK Manufacturing Purchasing Managers index fell for a fourth consecutive month, to 57.1 from 60.3 in August, although the final level was above the September preliminary reading of 56.3.

Delivery delays showed one of the biggest jumps in PMI history amid reports of freight delays, staff shortages, disruption caused by COVID-19 and Brexit, a shortage delivery drivers and port delays.

New export jobs fell for the first time in eight months, and employment growth was the weakest since January, as small manufacturers downsized.

Last week, the Bank of England downgraded its forecast for economic growth in the third quarter of 2021 due to supply constraints, which now also include fuel shortages caused by the lack of truck drivers.

Bottlenecks pushed up prices and inflation for manufacturing inputs was close to an all-time high in September.

The BoE said last week that it expected consumer price inflation to exceed 4% by the end of the year, more than double its target of 2%, strengthening arguments in favor of a first interest rate hike since the start of the pandemic.

Despite their current difficulties, companies participating in the PMI survey remained optimistic for the year ahead, with 62% expecting output growth.
Source: Reuters (Reporting by William Schomberg; editing by Susan Fenton)

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