The IHS Markit/CIPS UK Manufacturing PMI ended at 53.7 in October 2020, from a preliminary estimate of 53.3 and compared to September's final reading of 54.1.
Demand momentum continues
This data reflects that the sector has seen expansion for the fifth consecutive month. Crucially though, it is not just output that is supporting this - new order numbers are up as well! In previous months we have been pleased with output levels increasing but also aware that a lot of the output being recorded was coming from existing orders that had had to be suspended or ‘put on hold’ to some degree during our first lockdown period. It is excellent news that this month’s statistics show a marked increase in new order numbers pointing to the continued rising demand that we are all after.
Government must support the hardest hit
There are pockets of the industry however that have been hit harder than most and my mind turns to the aerospace industry in particular where demand will show no signs of recovery until consumers feel confident enough to fly and 14 day quarantine periods can become a thing of the past. Environmental pressures and corporate travel dynamics are likely to impact this industry long term, but it will recover to some degree and it is the Government’s responsibility to provide bespoke support to this industry and others that have been disproportionately impacted.
Unfortunately, we have become accustomed to falling levels of employment in the industry over the past year. Workforce restructuring measures have been put in place across many parts of the sector with the automotive and aerospace industries hit particularly badly. However, a recent survey that we have conducted with Make UK suggests that a large proportion of manufacturers do plan on investing in skills over the next 12 months. This is heartening to hear, and with new order numbers increasing for many, perhaps we may see a slowdown of the falling employment figures in the coming months.
With the weekend announcement of the latest national lockdown for November in mind, manufacturers will be delighted to hear that they can remain open throughout. Whilst the closure of non-essential retail is sure to impact some, we are just hoping that all of the momentum built over the past few months is not lost because of it.
Perhaps the Government meant it, when they said that we will rely on the manufacturing industry to lead us out of this crisis and the latest statistics definitely show cause for optimism. But as we all know, further complications are to come with the 31st December getting ever closer. Surely by the next monthly CIPS statistics, manufacturers will have some further clarity on Brexit. It is desperately needed.