Despite uncertainty and supply chain pressures, the latest CIPS Manufacturing PMI shows significant improvement increasing to a decade-high of 58.9 from 55.1. The results see an increase in output across the sector with new orders rising rapidly. Encouragingly improved demand can be seen domestically and overseas with new export business rising at the quickest pace recorded so far this year.
All of this means a degree of optimism that this monthly survey has not seen for seven years.
Industry spotlights – automotive and food and drink
As always there are parts of the manufacturing industry that have been finding current conditions more challenging than others. It was disappointing to see the latest UK car production statistics suggesting that the industry has had the worst February in a decade, but no surprise. That said, car production increased by around 20 per cent from January, so let’s hope for another increase when the March data is released. The early signs are good based on the March PMI results!
Meanwhile UK food and drink manufacturers have seen export levels take a huge hit post Brexit as businesses continue to grapple with additional red tape and supply chain disruption. This is far from ideal for a sector that exports large volumes of perishable stock to the EU. That industry will be hoping the third wave that is currently taking hold across Europe is managed quickly and effectively, because the continued closures of restaurants, hotels and other hospitality outlets across Europe will not help these already dwindling export levels.
So why all this positivity?
So, whilst there is uncertainty across some industries, the optimism recorded with the latest CIPS Manufacturing PMI is understandable when you consider the latest announcements from the UK Budget, including Freeports, the 130 per cent ‘super-deduction’ for capital spending and the planned review of research and development (R&D) tax relief which could deliver key tax benefits for manufacturers looking to invest in the UK.
In addition, the Government recently announced the creation of four new trade and investment hubs which aim to boost exports and deliver better access to global markets for Scotland, Wales, Northern Ireland and the North of England. As part of the Government levelling up agenda, these hubs could offer a real trade boost for manufacturing heartlands across the UK.
Roll on 2021
As we look ahead to lockdown restrictions easing, the UK is clearly stating its case as a place to manufacture; and when you combine the resilience of the sector with the range of proposed support then the future for UK manufacturing looks positive.