Lawyers Reveal Brexit Negotiation Concerns

The IHS Markit/CIPS Manufacturing Purchasing Managers’ Index (PMI) has today posted an impressive 58.2 for November, up from the final figure of 56.6 in October.

The figure represents the strongest result for over four years and provides a solid platform for the sector 2018.

Despite this positive news and the recent release of the government’s Industrial strategy, lawyers at Irwin Mitchell say that the priority for the next 12 months is a breakthrough in Brexit negotiations in order to facilitate a new trade deal.

Expert Opinion

“This is clearly a positive result for the sector and looks to put manufacturing in a strong position for the start of 2018.

“Whilst the Government’s Industrial Strategy White Paper is to be welcomed, the crucial test for the sector in the next 12 months and beyond however will be Brexit.

“Although the sector has been resilient to the uncertainty so far, the priority in 2018 is for a breakthrough in EU negotiations in order to establish whether a meaningful trade deal is possible and allow the sector to plan accordingly.”
Dorrien Peters - Partner

Key findings the latest IHS Markit/CIPS Manufacturing (PMI):

• More than 50% of UK manufacturers anticipate increased production and growth in the year ahead. Orders of investment goods have increased at the most rapid rate for 23 years.

• UK manufacturing production is growing the fastest for over a year and has increased to the highest rate for four years. 

• Higher sales were recorded to Europe as well as the US and South America, Asia Pacific and the Middle East.  

• New orders increased across consumer, investment and intermediate sectors, with investment goods orders at 23-year highs.

• Jobs growth for the sector has risen to the highest for three and a half years.

• Backlogs of work have increased in November, as growing demand has led to the need to grow workforces.

• Buying costs have increased at a similar level to that seen in October, which was a seven-month high, as commodity pricing soars and exchange rates remain volatile. These have pushed up vendor prices and increased pressures across the supply chain. 

• Output charges have in turn also gone up at a significant rate, the highest for six and a half years and again rising the quickest for seven months. Increased demand has helped improve pricing power and manufacturers have been able to pass on the increased costs to customers.

David Johnson, founding director at currency specialist, Halo Financial, added: “UK manufacturers are defying the general mood of doom and gloom and ongoing political uncertainty by growing and improving across the board and contributing a substantial lift to the UK economy. 

“Ironically, volatility in the value of the Pound has delivered a number of attractive levels for GBP buyers and sellers alike. So importers of raw materials and exporters of finished goods have both had good opportunities. A great end to the year – long may it continue into 2018 and beyond.”