Latest data released by Markit - 1 September 2020
The preliminary release can be found here. This just reaffirms a continued recovery in factory activity in the UK economy in August, with output rising at its fastest pace in more than six years - but from a low benchmark level.
Job losses continue to be an area of concern and with the government furlough program to run its course in October, that may present a real challenge in sustaining the recovery as we look towards Q4 this year. Markit notes that:
"The recovery of the UK manufacturing sector gathered pace in August. Output expanded at the fastest rate in over six years as new work intakes rose to the greatest extent since November 2017, led by an upturn in domestic demand and signs of recovering exports. Business optimism also remained encouragingly robust and close to July's recent peak.
"However, companies report that the current bounce is mainly driven by the restarting of manufacturers' operations and reopening of clients as COVID-19 restrictions continue to be relaxed. Backlogs of work fell at an increased rate, hinting at spare capacity, and the labour market remains worryingly weak, with job losses registered for the seventh straight month. The downturn in employment may have further to run as the government's furlough scheme is phased out unless demand rises sharply.
"Given the fragility of demand and uncertain outlook, both in terms of COVID-19 and Brexit, policymakers may struggle to prevent a 'surge-then-slump' scenario from developing."
