Hopes that UK manufacturing would see a further boost in the month prior to the seasonal shopping rush appear to have been premature, as the latest Markit Purchasing Managers’ Index showed growth slowing during the month of November.
The index that the company use to measure the state of UK manufacturing is centred at 50, so any number above that indicates growth and any number below it indicates shrinkage. November comes in with a healthy 52.7, but this comes off the back of a 16 month high of 55.2 that was seen in October. So, whilst November is a significant climb down from October, it still represents an above average month for the UK.
That indicates the UK manufacturing economy is growing, but the UK isn’t out of the woods yet. With threats from around the world in the form of China and other Asian countries, there’s a good deal more to be done.
Markit economist Rob Dobson said in a statement "Although the pace of growth so far is only very modest, it positions manufacturing as less of a drag on the broader economy," before going on to say "While the improvement in recent months is a welcome trend, scratching beneath the surface of the manufacturing numbers stills exposes a number of weaknesses. Growth remains heavily focussed on the domestic consumer, while the strong gains at large-scale producers have yet to filter through to SMEs. A broadening of the expansion is necessary if the nascent recovery is to be sustained”.
Part of the slowdown could to be to do with the strength of Sterling, which has made British exports more expensive inside the Eurozone. Indeed, export growth has remained above 50, but the biggest purchases of British consumer goods came from the United States, the Middle East, East Asia (despite their struggling markets). One European nation is also on that list (Germany), but in general the UK saw falling exports to those nations.
Martin Beck, a senior economic advisor at the EY ITEM Club said that “Despite the slip in the headline figure, today’s data suggests that manufacturing output entered Q4 with stronger momentum. This result adds to the evidence that the sector will finally pull out of recession in Q4. Indeed, the survey data suggests that manufacturing output is on track to grow by around 0.4% in Q4. With the monthly data for construction and services also pointing to greater momentum heading into the quarter, there also looks to be a good chance that we will see a modest acceleration in GDP growth in Q4.”
UK manufacturing businesses will have been buoyed over recent months by the low cost of oil, driving costs down for many manufacturers, especially those involved in plastics. This however is niot the case for Custom Fittings as we are directly linked to the oil industry with our stainless steel fittings being used in the hydraulic systems to pump oil. Nevertheless, all businesses have been helped by the low cost of petrol, which has made shipping costs cheaper for those businesses that engage in haulage.
All eyes will be on December’s numbers to reveal whether UK manufacturing can pull itself out of recession, but if it can then it’ll certainly be a boon to the Conservative government going in to 2016.