British manufacturing sees highest output in months

Goods made in Britain are back in demand as the UK’s manufacturing sector has seen its highest growth in nine months.

According to the IHS Markit/CIPS UK Manufacturing Purchasing Managers’ Index (PMI) figures rose to 50 percent in January, up from 47.5 the previous month.

Manufacturing makes up 10 percent of the British economy, and the most recent official data showed the sector shrank by 2.0 percent in the 12 months to the end of November, according to Reuters.

The UK fashion and textile manufacturing sector has always been a significant driver of the growth of the UK economy and in 2017 British manufacturers produced product worth 9.1 billion pounds and employed over 105,000 staff.

The General Election in December ended prolonged political uncertainty and saw a growth in sector confidence and aided mild recoveries in new order intakes.

The steady period also contributed to unchanging levels of employment, ending a nine-month sequence of job losses. Optimism within the sector improved to an eight-month high, with 47 percent of manufacturers forecasting that output would expand over the year ahead. However, new export orders fell for a third consecutive month, with firms citing weak economic growth in key markets – especially Europe – as the main factor.

Rob Dobson, director at IHS Markit, said: “Improvements were mostly seen via rising consumer demand and renewed input buying by businesses, suggesting that the reduction in uncertainty following the election has encouraged households and businesses to step up spending.

“In contrast, an ongoing downturn at investment goods producers suggests that the economic certainty required to achieve a full revival in capital spending may still be some way off, likely reflecting lingering uncertainty about the Brexit roadmap in the coming year.”

Duncan Brock, group director at CIPS, said: “Whilst exports fell for the third month in a row, it was home-grown orders that provided the fuel for manufacturing to move out of contraction territory as businesses returned to a little more normality.”

“Hopefully the momentum will now build in spite of potential obstacles and the sector pulls itself up by its bootstraps into growth next month as the UK negotiates its position with the EU.”

Article source: CIPS UK; image courtesy Fashion SVP