UK manufacturing is seeing sustained growth, in stark contrast with this time last year when the sector was ‘on its knees’.
According to the latest set of results from the Chartered Institute of Purchasing and Supply, May’s figures held steady at 58.0 – maintaining April’s fifteen month high. Any figure in excess of 50 indicates expansion.
The exchange rate was cited as a major factor in the positive findings, boosting exports from the UK.
However, fears of further economic troubles in Greece and Spain, and planned cuts from the new UK Government sounded a note of caution for the sector.
"The strength of recovery in the UK manufacturing sector has taken everyone by surprise – this time last year, the industry was on its knees,” admitted David Noble, CEO of the Chartered Institute of Purchasing and Supply.
“While the turnaround so far this year is obviously good news, we can’t forget this has been driven in large part by the weak sterling exchange rate bolstering export demand. Problems in countries such as Greece and Spain have strengthened the pound against the Euro recently and could also have a severe impact on the Eurozone economy. Given the euro countries are Britain’s biggest trading partners, any double-dip recession there would undoubtedly damage the UK manufacturing sector.
"There are also additional problems looming on the horizon which could constrain the pace of recovery. The boost from the inventory cycle will eventually wane, as firms stop balancing their stock, meanwhile the new government’s austerity measures will undoubtedly dampen the domestic market.
“Despite all this, the increase in manufacturing jobs is very good news, not just for the health of the sector, but for the UK economy as a whole. Higher employment means more money in the pockets of consumers which will have a positive knock-on effect on other parts of the economy and finally get us on the homerun."
If you’re a British manufacturer working in the cycle industry let us know your take on the current state of play. Email us at Jonathon.Harker@intentmedia.co.uk.