According to the report from IHS Markit/CIPS, the UK manufacturing upturn remained solid in July. Although rates of expansion in output and new orders slowed, they remained among the best in the survey history amid robust sales to both domestic and export clients. Scarcities remained a prime concern, however, as stretched supply chains and staff shortages were constraints preventing faster growth of output and employment.

The seasonally adjusted PMI posted 60.4 in July, down further from May's record high of 65.6. The PMI has signalled expansion for 14 months. Growth slowed across the consumer, intermediate and investment goods industries. Manufacturing production rose for the fourteenth consecutive month in July, as companies benefited from increased new order intakes, rising client confidence and the re opening of the economy. New business inflows reflected stronger demand from domestic and overseas markets. There were also reports of clients bringing forward purchases to guard against supply chain issues. That said, rates of growth in both output and new work both eased to four-month lows. July saw a further increase in new export business. The investment goods sector saw by far the steepest increase. Companies reported improved demand from the US, the EU, China, Russia and the Middle-East, although some noted that Brexit issues constrained exports to the EU. Scarcities, shortages and price rises remained prominent challenges faced by UK manufacturers during July. Raw material, staff and skill shortages were all major factors stymieing output growth and contributing to a further marked increase in input purchasing. Solid jobs growth continued, but the rate was insufficient to prevent a further increase in backlogs.

The outlook for the manufacturing sector remained on the upside in July, with 63% of companies forecasting output to rise over the coming year. Positive sentiment was linked to improving market conditions and reduced uncertainty surrounding both the post-Brexit and post-pandemic trading environment.