Supply chain constraints start to impact UK manufacturers

According to statistics taken from the latest Purchasing Managers' Index (PMI), the manufacturing sector has slowed slightly at 55.9, which is down from 56.7 in August, but up on its long-run average of 51.7.

Commenting on the data, Mike Thornton, head of manufacturing at RSM, said:

‘Output, new orders and employment continued to grow in September which remains positive. However, the increase in longer lead times could highlight a new, and future, issue for manufacturers. 

‘As suppliers deal with rising commodity prices, fluctuation in the exchange rate and uncertainty in the market, we could see less investment overall which, in turn, will bring a more sustained period of constraint within the supply chain. Less flexibility in the supply chain will no doubt impinge on the speed manufacturers can expand domestically and internationally; improve efficiency; and launch new products – highlighting a key challenge for future investment plans.

‘In addition, anxiety around access to high quality migrant labour is rising for manufacturers. Although the impact may not have been felt yet, clear direction from the government is needed on what the new arrangements might look like and clarity on timeframes to ensure manufacturers can adapt their business models effectively. If the supply of labour is restricted, manufacturers will need to consider alternative measures, such as automation or drawing on local talent, which could impact margins and productivity.’