Manufacturing output rises but employment levels fall

August has seen UK manufacturing output expand at the fastest rate for over six years as companies and their clients restarted operations following coronavirus lockdowns. New order intakes have seen the fastest increase since November 2017 and the CIPS Purchasing Managers’ index rose to a 30- month high of 55.2. All sounding pretty positive right? It is excellent to see these figures showing a bounce back for the manufacturing industry but this bounce back is as fragile as they come….

What is really going on?

Unfortunately, as many of you will know, this sudden uplift can largely be attributed to manufacturers working through the backlog of work that they have been unable to begin/complete over the past few months as well as the loosening of restrictions to combat coronavirus. One telling statistic is that manufacturing employment has declined at one of the steepest rates during the past 11 years and this is happening before the Government’s furlough scheme has even been fully withdrawn. Many manufacturers must be concerned as to how the withdrawal of this scheme will truly impact them when we get into November and beyond. 

The longer term

Coronavirus infections continue to fluctuate across the world and importantly local lockdowns will be employed to combat the virus. The interruption and complications that these lockdowns will have on supply chains over the coming months is as yet unclear but with the Brexit deadline getting ever closer, these are two further headaches for manufacturers during what is the most stressful and turbulent of times. It is great to see the industry bouncing back, but clarity on Brexit and bespoke support for some of the areas of the industry that have been hardest hit will help further. Meanwhile Government are facing a difficult challenge to start to rebalance the books whilst not eroding further business confidence.

For more information on how RSM can help your manufacturing business, contact Mike Thornton.

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