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The strong recent rebound in new orders within the manufacturing sector was a much needed boost, but the impact on M&A activity in the coming months is far from clear.

One of the most respected barometers of manufacturing activity in the UK – the Markit/CIPS UK Manufacturing PMI – found that factory activity improved to a two-year high in September, bouncing back from a 41-month low in July.

The uplift between July and August had already represented one of the biggest month-to-month jumps since the aftermath of the global financial crisis in early 2009 and the index continued to confound leading economists’ expectations during September.

The survey of purchasing managers at more than 600 industrial companies showed that output recovered at one of the fastest paces on record, with new orders enjoying one of the strongest month-to-month rebounds. Companies reported solid inflows of new work from domestic and export customers, with exports said to be growing at its fastest pace for 26 months.

Whether this boost for the sector will continue is hard to say. We seem to be bombarded in the media with post Brexit data on a daily basis and although market sentiment appears more upbeat than expected, the statistics do not all point in the same direction.

As a result of this, it is difficult to predict what the impact on M&A within the sector over the coming months will be.

Our own analysis of data from Experian Corpfin points to a fall in activity during the month immediately after the referendum result. In fact, during July there were 140 manufacturing deals compared to 176 in July 2015.

Again, according to Experian Corpfin, out of the manufacturing deals involving UK based manufacturers which completed in July this year, 15% were cross-border transactions involving UK targets.

This compares to 18.5% during the same period last year. The 20% fall in July manufacturing deals is perhaps also therefore due to a reduction in interest from overseas buyers.

Having said all of the above, although there has been a reduction, it is not significant. In fact you could argue that faced with such uncertainty, the numbers have held up reasonably well. This trend also looks to be the case when you look at cross-border deals generally.

Outside of the manufacturing sector, recent data from Thomson Reuters revealed that almost 60 transactions totalling $34.5 billion have been transacted by foreign companies to acquire British firms since 23 June. The figure is lower than the 79 deals completed in the month leading up to the vote, but again much higher than expected.

According to Reuters, the sectors with the highest concentration of foreign takeovers in the past four weeks were technology, consumer, media and industrial.

Despite all the uncertainty and the dangers of reading too much into just one month of economic data, it appears confidence within the manufacturing sector is reasonably robust with the sector performing better than many expected.

At Irwin Mitchell, we have seen M&A activity particularly contract in manufacturers which are part of the supply chain to the construction industries.