Following a dip in the CIPS UK Manufacturing Purchasing Managers’ Index, RSM UK’s national head of manufacturing, Mike Thornton, predicts a potential rebound for the sector, spurred by recent government announcements and the upcoming Budget.
Manufacturing PMI Dips, But Hope Remains
The CIPS UK Manufacturing Purchasing Managers’ Index experienced a slight decrease, dropping to 49.9 from 51.5. This marks the first time in six months that the index has fallen below 50.
Despite this, Mike Thornton of RSM UK remains optimistic. He attributes the dip to pre-Budget anxieties and anticipates a boost in business confidence following the release of the Industrial Strategy green paper and the upcoming Budget.
Budget Announcements Could Fuel Manufacturing Rebound
Thornton believes that the sector is poised for growth, with the Budget potentially acting as a catalyst for a manufacturing rebound as 2024 draws to a close. He cites the government’s commitment to invest through capital allowances and the research and development (R&D) tax regime as positive signs.
The Budget’s allocation of £1 billion to aerospace and £2 billion to automotive is also seen as a promising move for the advanced manufacturing sector.
Signs of Recovery Amid Pre-Budget Nerves
Tom Pugh, an economist at RSM UK, echoes Thornton’s sentiments. He suggests that the drop in the manufacturing PMI is likely due to pre-Budget nerves and predicts an upward trend in the last two months of the year. Despite a fall in the output, new orders, and future output indices, Pugh points to the employment index ticking back up to 51.4 and a significant drop in the input prices balance from 57.7 to 49.5 as positive indicators for the manufacturing sector.
With the UK Manufacturing sector showing signs of optimism and resilience, the industry looks forward to a potential revival post-Budget. Despite recent challenges, the commitment of the government and positive indicators within the sector signal a promising future for manufacturers in the UK. Nearshoring and digital transformation are also expected to play a significant role in this revival.
