Chris Barlow serves as the head of manufacturing to MHA. He comments on today's manufacturing PMI data which saw a surprise rise to 45.4 however optimism in the sector remains low.
The slight uptick in manufacturing PMI to 45.4 has come as a welcome surprise, but still remains well below the 50 threshold, and frankly, we’re not seeing a huge amount of optimism in the sector. The industry is operating in a subdued environment and is continually grappling with ongoing macroeconomic challenges.
This is also the first month that businesses in the sector will have paid both minimum wage pay rises and employers' National Insurance. On top of this, the cost of electricity is the highest in Europe, placing additional demands on the bottom lines of manufacturers across the country and with the combined increase in costs causing them to think about cutting jobs.
With costs rising on every front and uncertainty around a trade deal between the US and the UK, our clients are being very cautious and delaying any long term investment decisions. Until a deal is reached between the UK and the US, closer ties are forged again with our European neighbours, or an announcement is made on the long-awaited Industrial Strategy, the prospects for investment and hence growth remain weak.
One recent bright spot in the gloom surrounding the sector was the government’s decision to seize control of British Steel which, hopefully secures not only supplies vital for our country’s infrastructure but also jobs in the sector.
