The UK manufacturing sector expanded at a record pace in May on stronger production growth and record gains in new orders, despite a surge in inflationary pressures.

The purchasing managers’ index for the manufacturing sector climbed to 65.6 from 60.9 in April, survey data from CIPS and IHS Markit showed Tuesday. Economists had forecast a score of 66.1.

A PMI reading above 50 signals growth in the manufacturing sector. The latest reading surpassed July 1994’s previous record high of 61.0.

The UK manufacturing sector has expanded in each of the past 12 months.

Stronger demand from the EU, the US and China led to record growth in new export orders. Large companies continued to see record gains in new export work, while the rate of increase at small firms was comparatively mild.

Backlogs of work rose to the greatest extent in the survey history, thanks to capacity pressures due to strong demand. Consequently, manufacturing firms hired staff at a record pace.

Input shortages, transport delays and higher demand for raw materials led to a record lengthening in the average time taken to deliver inputs to manufacturers.

Input costs rose at the fastest pace since the survey began in January 1992 due to raw material shortages and supply-chain disruption. Manufacturers passed on the cost pressures to clients and the output price inflation also hit a survey record.

Purchasing activity was also at an all-time high for the survey as firms tried to reduce the impact of supply chain disruptions, meet production needs, build-up safety stocks and guard against further price rices.

Business sentiment rose to its highest level since data on future activity were first collected in July 2012, the survey said. More than 70 percent of companies forecast that production would be higher in one year’s time, compared to only 3 percent expecting a decline.

The survey attributed the improved optimism to the end of the pandemic, economic recovery, planned business expansions, a revival in World trade flows and reduced supply-chain issues.

“Growth is being boosted by the unlocking of economies from COVID restrictions and ongoing vaccination programs,” IHS Markit Director Rob Dobson said.

“This is being felt across the globe, as highlighted by a record rise in new export business during the latest survey month.”

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