Irwin Mitchell's Head Of Manufacturing Adds Note Of Caution To Latest Figures
The July Manufacturing Purchasing Managers’ Index (PMI) continued the trend towards slower growth - although the figure remains firmly within growth range at 54.0.
New export orders increased at the strongest pace for six months with growing demand for exports coming from across Europe, China, the USA and Middle East.
The Index found that employment in the UK manufacturing sector has grown every month for two years now, as manufacturers have expanded their business and worked to increase output and reduce backlogs.
More jobs have been created across all sectors, including intermediate, investment and consumer goods.
Investment goods producers saw the biggest increases in production and new order growth. Output and new business growth also continued at a solid pace for consumer goods.
Intermediate goods, usually enjoying significant growth in production, saw a dip for the first time since 2016.
The positive outlook so often seen by the sector has fallen to the lowest in almost two years, amid ongoing Brexit and international trade uncertainties.
However, almost half of the manufacturing companies surveyed believe output will increase by the same time in 2019, with only a very small percentage anticipating a drop in growth. Broadly, UK manufacturing firms are still confident about investment, business expansions on the horizon, and new product development and launches.
Tony Piggott, head of corporate sales at currency specialist, Halo Financial, commented, “The UK manufacturing sector is understandably suffering from global economic uncertainties and continued lack of clarity on the future of global trade, alongside rising commodity and input pricing.
“Any UK business dependent on international trade should review their business plans and look at their exposure to currency volatility – driven by the continued political and economic concerns – to see where costs can be offset and payments protected. These savings on international transactions, alongside growing demand for exports, could help to balance the increasing domestic pressures, as well as providing certainty of costs across the supply chain.”
Dorrien Peters, head of manufacturing at national law firm, Irwin Mitchell, added a note of caution:
Expert Opinion“Whilst it is encouraging that nearly half of the manufacturing sector remains positive, there are many uncertainties that may well prove this confidence to be sadly misplaced. With interest rates set to increase to the highest level since 2009 and still no clear outcome from the government’s Brexit negotiations on the horizon, there is much to encourage caution when assessing future prospects for the sector.” Dorrien Peters - Partner