(Bloomberg) -- U.K. factory output expanded at the quickest rate in more than six years as firms ramped up operations following the nationwide Covid-19 lockdown.
IHS Markit's measure of production posted its highest reading since May 2014. The overall manufacturing Purchasing Managers Index climbed to 55.2 in August, the highest in more than two years and well above the 50 mark indicating expansion.
Britain is emerging from the worst economic slump in centuries after the coronavirus brought activity to halt in the second quarter. The question now is how well the rebound can be sustained as government support programs taper and firms adjust to the new reality.
“Policy makers may struggle to prevent a ‘surge-then-slump' scenario from developing,” said Rob Dobson, director at IHS Markit. “The downturn in employment may have further to run.”
New orders increased the most since 2017, driven by domestic demand as more firms reopened after restrictions to slow the spread of the disease were lifted.
Supply chain disruption continued to push input prices higher though and employment in the industry dropped for a seventh month as the government began to wind down its emergency wage subsidies.
©2020 Bloomberg L.P.
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