RSM's Mike Thornton comments on the latest CIPS UK Manufacturing PMI

Commenting on the latest CIPS UK Manufacturing Purchasing Managers’ Index, Mike Thornton, Head of Manufacturing at RSM, said:

‘The latest CIPS Manufacturing PMI signalled that business remains relatively good for many UK manufacturers heading into the festive period. At 53.4, the index remained above neutral for the fourth month in a row and above the long-run average of 51.5.

‘Very few people in the UK have escaped the profound currency impact experienced post-Brexit. For manufacturing, it really is a tale of two conflicting stories and this is borne out in the latest statistics. On the negative side, the purchasing cost of goods from overseas has increased; putting pressure on margins, and it is interesting to see that 87 per cent of manufacturers are citing rising raw material costs as their reason for price rises. On the positive side, export conditions are very favourable and it is great to see increased demand from USA, mainland Europe and the Middle East.

‘For many businesses, the real impact of the seismic shift in exchange rates may not be felt until next year. Those who have used currency hedging to manage volatility will have been insulated from the movements, but in reality most will not have any protection for more than 12 months. Again, this could be good news for export driven manufacturers but more challenging for importers servicing the UK domestic market.

‘Reflecting on 2016, who would have thought that the political landscape would have changed so dramatically? Undoubtedly economic conditions are more uncertain, and long term investment in manufacturing is a cause for concern, but for now the overall sentiment for UK manufacturers is positive.’