LONDON (Reuters) – Output from Britain’s manufacturing sector shrank at the fastest pace since the euro zone debt crisis in March as the spread of coronavirus led to a spiraling of delays and hammered business confidence, a survey showed on Wednesday.
The final version of the IHS Markit/CIPS Purchasing Managers’ Index (PMI) slumped to 47.8 — its lowest since July 2012 — from 51.7 in February, slightly weaker than a preliminary “flash” reading of 48.0 recorded earlier in March.
Transport delays and raw materials shortages led to the steepest increase in vendor lead times in the PMI’s 28-year history and business optimism slumped to the lowest level on record. Job losses were the most severe since July 2009.
“The effects were felt across most of manufacturing, with output falling sharply in all major sectors except food production and pharmaceuticals,” Rob Dobson, a director at IHS Markit, said.
“The transport sector, which includes already-beleaguered car-makers, suffered the steepest downturn.”
The survey was conducted March 12-26, including the days immediately after Prime Minister Boris Johnson ordered a shutdown of much of the country’s economy on March 23.
A final version of IHS Markit’s survey for Britain’s dominant services sector, which has been hardest hit by the closure of bars, restaurants, gyms and other businesses, is due to be published on Friday.
Many economists have predicted Britain’s economy, like others around the world, is heading for a contraction of possibly 10% or more in the second quarter, worse even than during the Depression nearly century ago.
In the hope of keeping companies alive while the shutdown lasts, Britain’s government has announced ten of billions of pounds worth of stimulus and 330 billion pounds of state loan guarantees. The Bank of England has ramped up its bond-buying and cut interest rates to an all-time low of 0.1%.
Dobson said there was one slightly more positive detail in Tuesday’s survey: manufacturers expected to see output higher in one year’s time.
(Reporting by William Schomberg; Editing by Catherine Evans)