Small Manufacturers Can Look Forward With Optimism After More Healthy Growth Figures

The UK's manufacturers enjoyed another bumper month in May, with the latest Markit/CIPS Purchasing Managers Index (PMI) indicating that the healthy expansion of recent months is continuing to speed ahead.

It stated: "May saw the UK manufacturing sector maintain one of its brightest spells of output and new order growth in the 22-year survey history.

"As manufacturers ramped up production to meet strong inflows of new work from both domestic and export markets, the benefits were also shared with the wider economy through solid job creation and rising levels of input purchasing."

The Reading on the index was 57, slightly down on April's 57.3, but still one of the highest in the history of the survey. It also means the manufacturing sector has been expanding since March 2013. Reasons for the growth include rising demand from clients in the US, Canada, Europe, Asia, the Middle East and New Zealand.

Such news will have brought plenty of cheer to SMEs, both to those directly involved in manufacturing and firms supplying auxiliary services to clients in the sector.

Indeed, senior economist at Markit Rob Dobson observed: “The upturn remains broad-based by sector and is being enjoyed by SMEs and large-scale producers alike."

Among examples of this is the level of employment, with SMEs and larger firms alike continuing to take on more staff, the 13th successive month in which this has happened. 

Mr Dobson said the rate of growth in manufacturing is now running at 1.5 per cent in gross domestic product terms, although the impact of the recession was such that it remains 7.5 per cent lower than at its pre-crisis peak. That means the present rate of expansion will need to be maintained until the middle of next year to close the gap.

The positives emerging from the PMI data are in line with the sentiments displayed by the latest Confederation of British Industry growth indicator, which found the manufacturing, service and retail sectors collectively enjoyed a positive business growth balance of 35 per cent - the highest since the survey began in 2003.

Expert Opinion

Plenty of optimism remains present across the manufacturing sector, which is great news for businesses of all sizes. However, smaller firms will be feeling particularly positive with this news and many may even be considering what their next steps are in terms of taking advantage of the positivity. <br/> <br/>"We would urge businesses to always carefully plan their expansion, growth and development – putting an emphasis particularly on getting access to the right support and advice to help them on their way. Legal advice is vital in this regard on a range of levels, including in terms of employment, real estate, compliance and contract advice." Fergal Dowling - Partner