Thursday 17th Aug 2017 - Logistics & Supply Chain

Manufacturing growth continues, says CIPS/Markit report

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The UK manufacturing sector made a robust start to the third quarter, according to the Markit/CIPS  purchasing managers’ index. There were further marked increases in both production and new work received in July and the recovery remained broad-based, with growth of output, new orders and jobs across the consumer, intermediate and investment goods sectors.

Rob Dobson, senior economist at Markit and author of the UK Manufacturing PMI, said: “UK manufacturing continued to boom at the start of the third quarter, with the PMI suggesting only a slight loss of momentum from the 1.6 per cent surge in production seen in the second quarter. The PMI is showing surprising resilience, having fallen only modestly since hitting a fifteen-and-a-half year peak in May, and July even saw new order growth accelerate again, largely on the back of rising domestic demand.”

These results are reinforced by a study by manufacturers’ organisation the EEF and BDO LLP, whose Economic Prospects 2010 report found that manufacturing will grow by 3.8 per cent this year and 3.4 per cent in 2011, outstripping that in the economy as a whole, which is forecast to expand by 1.1 per cent in 2010 and 2.1 per cent in 2011.

Tom Lawton, head of manufacturing at BDO LLP, said: “Despite the EU economic slowdown, there are fantastic opportunities for growth in other countries like China and India and we welcome the recent UK trade delegation’s visit. However if the coalition government is to truly enable international growth in new markets, they must work closely with the banking sector to ensure appropriate financing structures and support is in place to enable businesses take advantage of new export opportunities.”

The report shows that the turnaround in world trade flows has been the driving factor in UK manufacturing’s recovery, with emerging markets playing an important role.

New analysis in the report shows that, since the recovery began, in all sectors there has been a larger percentage increase in exports to the developing BRIC (Brazil, Russia, India, China) economies than developed ones, particularly in transport and metals – a reflection of their stronger growth performance. The report forecasts that, for 2010, GDP growth in Brazil will be 7 per cent, Russia 5 per cent, India 8.2 per cent and China, despite an easing, 9.4 per cent.

However, the report warns that low levels of investment remains an Achilles heel. Investment by manufacturing firms is not forecast to grow until 2011, having fallen by over a third during the recession. As with sector output, there is considerable variation between industries.

 

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