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Manufacturing Growth Slows According To Latest IHS Markit/CIPS UK PMI

Irwin Mitchell's Head Of Manufacturing Comments On Latest Statistics

03.09.2018

David Shirt, Press Officer | 0161 838 3094

The latest IHS Markit/CIPS UK Manufacturing Purchasing Managers’ Indices (PMI) have revealed that the sector is still growing in the UK and EU.

The UK posted 52.8 for the month of August, however the report highlighted that it was the lowest level for more than two years. Employment in the UK manufacturing sector slowed with output reducing and new export levels also easing.

While the sector retains some of its optimism, with almost half (47%) of UK manufacturers surveyed expecting increased production in the coming year, it was revealed that this vote of confidence is at the lowest for almost two years. 

Optimistic manufacturers cited planned new investment and products, along with anticipated growth in new export orders and increased capacity on the horizon. This was balanced with a number of firms voicing Brexit and exchange rate concerns.

The report also revealed that cost pressures remain high across the UK and wider EU, with input and output costs increasing at above average rates in the UK and at a slower rate within the Eurozone. 

Higher costs and shortages of raw materials, higher-priced electrical components and rising fuel costs have all been passed on to clients as increased pricing. This, along with a number of recent transport delays, has created longer vendor delivery times, which have lengthened considerably in August for both the UK and across the Eurozone.

Commenting on the latest report, Dorrien Peters, head of manufacturing at law firm, Irwin Mitchell, said: 

Expert Opinion
“These results are disappointing, but not surprising, as we are seeing some growth in the sector, but the weight of uncertainty in the UK and across Europe is taking its toll on confidence levels.

“The manufacturing sector generally has been incredibly resolute in recent years and it is vital that this willingness to tackle the challenges that lie ahead continues.

“There are encouraging signs that many are continuing to invest in new products and hopefully as the commercial environment becomes clearer as we approach Brexit, the levels of growth amongst manufacturers will continue to rise.”
Dorrien Peters, Partner

David Johnson, founding director of currency specialist, Halo Financial, said: “The ongoing uncertainty surrounding Brexit has finally bitten the manufacturing sector, chipping away at the confidence of an industry that usually displays considerable optimism. 

“The practicalities of economic uncertainty, from volatile exchange rates, to increasing costs, are taking their toll, despite slivers of hope for improvement in the year ahead. Any clarity on a UK-EU deal has an immediate positive effect on the value of the Pound, as we saw with Mr. Barnier’s comments last week. These gains are likely to be reflected in both UK and EU industry. Everyone is hoping for some positive real news, while trying to get on with business as usual. No mean feat, but pragmatism is a very British trait.”