Stockpiling helps manufacturing sector power through Iran war blows
The manufacturing sector has powered through the turmoil brought by the Iran war as output grew at the fastest pace in 21 months, according to a business survey.
S&P Global researchers said that output growth accelerated as firms rushed to stockpile goods ahead of further expected trade turmoil in the Middle East.
The overall purchasing managers’ index (PMI) score was 52.5 for manufacturing in June, lower than the four-year high of 53.1 in May.
Output expanded higher despite new orders increasing at a slower pace. Consumer and intermediate goods industries recorded growth in production levels, though researchers warned that momentum was set to fade in the second half of the year.
Rob Dobson, director at S&P Global, said there was a “bigger concern” about the impact on manufacturers as stockpiling levels slow down.
“A drop in the rate of growth of new work intakes suggests this boost is already starting to fade,” Dobson said.
“Manufacturers’ optimism about the year ahead also remains tepid, with many concerned about geopolitical tensions and uncertainty over the future course of government policy.”
Burnham’s focus on manufacturing
S&P Global data also suggested that exports increased for the six months in a row despite global tensions while employment also increased.
Business owners will now be hoping that the next Prime Minister, which is highly likely to be Andy Burnham, delivers on promises to “reindustrialise” parts of the UK.
Make UK boss Stephen Phipson, who represents various manufacturers across sectors such as defence, said reducing industrial energy prices should be a core focus for the next leader.
“The need for action is urgent. Business confidence is at its lowest level for four years, while one in four manufacturers have either moved production overseas or are considering doing so because of the UK’s high cost base,” Phipson said.
“The next government must act quickly to restore competitiveness and unlock investment across UK industry.
Burnham has already promised to prioritise British businesses in government procurement though he has not been outspoken on areas such as North Sea oil and net zero commitments.
Cara Haffey, industrials chief at PwC UK, said a change in industrial strategy and energy policy was a key focus for businesses.