London, United Kingdom. British manufacturers reported a sharp rise in cost pressures in April, with delivery delays the most widespread since mid-2022 due to the standoff in the Strait of Hormuz, a survey found. The results highlighted the impact of the Iran war on supply chains and prices.
PMI rises and supply constraints intensify
S&P Global’s UK Manufacturing Purchasing Managers’ Index rose to 53.7 in April from 51.0 in March. The final reading was slightly higher than the 53.6 shown in the provisional April data.
S&P said restrictions on ships aiming to go through the Strait of Hormuz lengthened delivery times to the greatest extent in nearly four years.
Shipping disruptions and rerouted trade
International shipping has been disrupted since the US-Israeli war on Iran began in late February, and the sea channel remains closed, cutting off 20 per cent of the world’s supplies of oil and gas and pushing global energy prices higher.
Many vessels have also avoided the Red Sea route to the Suez Canal due to attacks from Houthi forces in Yemen, taking the longer route around the southern tip of Africa instead.
Input costs and selling prices accelerate
While the survey showed output and new orders rose in April, manufacturers’ input costs increased at the fastest pace since June 2022.
“The gain in production is partly the result of clients bringing forward purchases to mitigate expected price uplifts and supply disruptions,” said Rob Dobson, director at S&P Global Market Intelligence.
There was also evidence of firms passing on higher costs, with the PMI measure of average selling prices rising at the sharpest rate since November 2022.
Optimism weakens
Business optimism for the coming 12 months fell to its lowest level in a year. Survey respondents cited concerns about the impact of the Middle East conflict and the consequences of government policies.
How do you expect prolonged shipping disruptions to affect prices and availability for manufactured goods in the coming months?
