GROWTH of broad UK manufacturing activity accelerated modestly in May, from the slowest pace in 17 months in April, but fears over underlying weakness were fuelled by a surge in stocks of unsold goods.

The Chartered Institute of Procurement & Supply, publishing its latest UK manufacturing report yesterday, noted the build-up in finished goods stocks last month was the steepest in the 26-year history of its survey. It also expressed worries over a sharp reduction in backlogs of work. Manufacturing employment growth slowed to a crawl, with the increase in the workforce the weakest since February 2017.

CIPS’s survey also showed a deceleration in growth of UK manufacturers’ new orders to its slowest rate in 11 months, amid domestic weakness. Growth of new export orders accelerated in May, having slowed in April.

The headline purchasing managers’ index (PMI) for UK manufacturing, a composite measure of changes in output, new orders, employment, suppliers’ delivery times and stocks of goods purchased, rose from 53.9 in April to 54.4 in May on a seasonally adjusted basis, moving further above the 50 no-change mark. The output sub-index rose from 55.4 in April to 56.9 last month, to signal the sharpest monthly increase so far this year.

CIPS said: “Although growth of production accelerated to its best during the year so far, this was mainly achieved through the steepest build-up of finished goods inventories in the 26-year survey history and a sharp reduction in backlogs of work.”

It added: “Growth of incoming new business remained solid in May, but the pace of expansion eased to an 11-month low. The slower trend reflected a softer increase in new work from the domestic market, as inflows of new business from overseas strengthened slightly.”

UK manufacturers’ optimism about prospects for increased business activity on a 12-month view was in May at its weakest since November.

Rob Dobson, director at survey compiler IHS Markit, said: “At first glance, the mild acceleration in the rate of output growth and rise in the headline PMI would appear [to be] positive outcomes given the backdrop of the slowdown seen in manufacturing since the turn of the year. However, scratch beneath the surface and the rebound in the PMI from April’s 17-month low is far from convincing.”

He added: “A slowdown in new order inflows meant the expansion in production was achieved only by firms working through their backlogs of work. Weaker-than-expected sales meanwhile led to the largest rise in unsold stock in the survey’s 26-year history.

“This suggests that manufacturers have yet to fully adjust their production to the weakening trend in new business growth and there will need to be a rapid improvement in demand if output volumes are to be sustained in the coming months.”

CIPS director Duncan Brock said: “Complacency should not replace vigilance as creeping business uncertainty and consumer apathy further compounded these deepening concerns. As Brexit worries continue to dominate, the sector will be looking to the UK Government to provide solutions and prevent this underlying fragility from becoming entrenched stagnation.”