UK manufacturing edges into growth territory for first time in over a year
UK manufacturing has edged into growth territory for the first time in over a year following months of struggle piling onto the sector.
The S&P Global UK Manufacturing Purchasing Managers’ Index™ (PMI) hit a 14-month high
of 50.2 in November, up from 49.7 in October.
This placed the industry above the all-important 50 mark which indicates if a sector is growing. The survey closed just a day before Rachel Reeves delivered her Autumn Budget on 26 November.
Rob Dobson, director at S&P Global Market Intelligence, said: “It will be interesting to see the extent to which business might react to the absence of any significant growth-promoting measures.
“After all, despite the improvement in the performance of the manufacturing sector, any growth is still worryingly weak.”
The PMI said November included a “stabilisation in new business following a 13-month sequence of contraction”.
Business optimism also edged up to a nine-month high with just over half of manufacturers stating they expect their level of output to be higher in a years time.
Dobson added: “[A] combination of soft industrial performance and subsiding price pressures will add to the shift in policy debate away from inflation fears towards supporting economic growth.”
Budget a mixed bag for manufacturers
The industry has also been hit by the major cyber attack on Jaguar Land Rover, which caused car production to be slashed by almost 30 per cent in September.
Manufacturing at JLR was halted for five weeks from September 1, triggering a £1.9bn hit.
Just ahead of the Budget, the manufacturing industry warned the government must prioritise growth in the face of “existential threats.”
Experts warned any recovery could remain “short-lived” if the government piles further pressures on firms at the Autumn Budget.
The sector’s industry body Make UK said companies fear further burdens and costs from changes to inheritance tax hitting family firms along with the implications of the looming Employment Rights Bill.
The government reversed its contentious plans to hand all new staff protection from unfair dismissal from day one – which were apart of the Bill – after months of warnings about the workers’ rights package from industry and fierce political resistance from the House of Lords.
Make UK called for a commitment from the government of no further national insurance hikes and a targeted exemption from business rates for investments in green technologies.
Following the Budget, Stephen Phipson, chief executive of Make UK, said: “The Chancellor should also be commended for her personal intervention to kick start the consultation on the business energy support scheme which is vital if we are to address the UK’s eye watering and uncompetitive industrial energy prices.”
But he added: “On the downside, however, restricting tax relief on salary sacrifice and, a further increase in the National Living Wage mean that manufacturers are again facing greater barriers to successful recruitment and retention of skilled staff…
“The Government came to power promising that growth was going to be its number one mission and, while it was dealt poor cards, we have yet to see any significant upswing in our economic performance and productivity.”