The UK manufacturing sector continues its growth trajectory and remains resilient, with sustained growth recorded for the last month.
The latest Markit/CIPS UK Manufacturing Purchasing Managers’ Index (PMI) posted at 56.7 for May 2017, only slightly lower than April’s impressive three-year high figure of 57.3, showing improvement and growth across the sector for the tenth month in a row.
“The UK manufacturing sector once again demonstrates its strength and drive,” comments David Kerns, corporate commercial development lead at currency experts, Halo Financial.
“Production and new orders have increased at well above average rates, with notable growth in new export business, as a weaker Sterling and a larger number of manufacturers launching products into new international markets boosts demand,” he continues.
“The forecast for the industry is good and optimism is high, which all helps in boosting overall business and economic confidence for the UK as we face challenging times ahead.”
Increasing exports, production and output growth
Export orders have increased for over year now, alongside strong production growth and increases in new orders across the board. The intermediate goods sector led the charge for output growth, with levels increasing to a four-month high.
Business confidence gets a welcome boost
The rates of growth recorded in recent months have boosted business sentiment, which in turn has led to increased employment and jobs growth in the sector. Employment in the sector has risen for the last ten months at the fastest for three years.
Business optimism in the UK manufacturing sector remains high – the outlook for growing production levels in a year’s time is at the highest for almost two years: 56 per cent of manufacturers expect output to grow over the coming year.
Cost pressures continue
Inflation rates, input and output costs remain high, although they have eased a little more from the extreme highs we have seen in recent months. Growth in selling prices is still at the fastest rate recorded in the survey, although this has slowed to the lowest for five months.
A weak Pound and the rising cost of raw materials have piled on the pressure, leading to some supply shortages and longer vendor lead times. However, in a vote of confidence for the future of the sector, a number of manufacturers who participated in the survey felt that they had retained enough pricing power to be able to pass the higher costs on to clients.
Atul Kariya, National Sector Head of Manufacturing and Engineering at accountants and business advisors, MHA Macintyre Hudson, commented,
“Another month of impressive results and growing confidence in the UK manufacturing sector demonstrates UK Industry’s resilience under pressure and a sector that is getting on with business – seemingly both surviving and thriving in challenging times.”
“I’m especially pleased to see manufacturers saying that they are in a strong enough position to be able to navigate rising costs, passing them on to customers where appropriate. Inflationary pressures are our main concern for the sector for the longer term, but it seems that UK manufacturing firms are able to deal with them for now.”
Neil Lloyd, Sales Director at solicitors specialising in the sector, FBC Manby Bowdler, commented: “The continued confidence shown across the UK manufacturing sector is very welcome, indeed it’s proving quite resilient.”
“Whilst it is welcoming news that output and new order growth have remained consistently strong, the most pleasing aspect for me is the job creation rate, which, after 10 consistent monthly rises, is at a 35-month high. Our manufacturing clients continue to tell us business is good and I expect similar PMI results into the next quarter.”