Amidst export challenges and fluctuating global markets, UK manufacturers report sustained growth and robust domestic demand in August, according to the latest CIPS Manufacturing PMI. Industry leaders spotlight the dual impact of geopolitical tensions and potential government interventions on the horizon.
Robust Domestic Gains Amidst Export Troubles
The CIPS UK Manufacturing Purchasing Managers’ Index for August shows a promising rise to 52.5 from 52.1, marking the highest level observed since June 2022. Mike Thornton, national head of manufacturing at RSM UK, highlighted the significance of this growth, noting the increase in the employment index to 52.5 as a strong indicator of sector confidence. Businesses are ramping up resources and capacity in anticipation of a solid work pipeline, reflecting optimism for continuous sectoral growth.
This growth trajectory is further evidenced by the balance between demand and output. The sector has been on a steady recovery path, fueled primarily by new orders rather than clearing existing backlogs. Thornton pointed out that the sustained output rise since the start of the year, despite minor monthly variations, underscores a robust recovery grounded in new demand.
Export Challenges and Strategic Outlook
Despite the positive domestic landscape, UK manufacturers face hurdles in the export domain, with new export orders experiencing a notable decline. Factors such as geopolitical tensions, logistical issues in shipping, and a downturn in major markets like the Eurozone and China are pressing concerns. The upcoming Autumn Budget is keenly awaited, with industry advocates like Thornton urging the government to bolster investments and funding to keep the UK competitive on the global stage, especially with looming challenges like energy price hikes and potential tax increases in October.
Tom Pugh, economist at RSM UK, also provided insights, noting the sustained rise in the manufacturing PMI indicates healthy sector and broader economic growth. The employment balance, reaching its highest in over two years, suggests a revival of confidence and hiring within the sector. Furthermore, easing inflation pressures, with simultaneous reductions in input and output prices, provide some relief amidst rising outputs, potentially easing the burden on the Monetary Policy Committee (MPC).
This ongoing trend of resilience in the face of external pressures paints a complex but hopeful picture for UK manufacturers, as they navigate through a transformative period with strategic foresight and governmental support poised to play crucial roles.
