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Reasons for optimism as manufacturing PMI hits seven-month low

AuthorsCaroline Litchfield

2 min read

Manufacturing & Supply Chain

Reasons for optimism as manufacturing PMI hits seven month low

The downturn in the UK’s manufacturing sector deepened in July, with the latest S&P / CIPS UK Manufacturing Purchasing Managers' Index (PMI) hitting a seven-month low.

However, there are reasons for optimism over the long term. Here, Caroline Litchfield — partner and sector lead for manufacturing and supply chain  comments.


Advanced manufacturing investment

UK manufacturing continues to suffer from a global malaise, with demand dampened after months of sticky inflation. Crucially, however, optimism that output will grow over the next year has increased month-on-month.

Businesses anchored in the North will be encouraged by Government investment announced last month in South Yorkshire’s advanced manufacturing sector, and for building Merseyside’s life sciences industry.

Meanwhile, Jaguar Land Rover confirming its plans to build an electric car battery gigafactory in Somerset is a major win for automotive supply-chains around the UK. The announcement comes as separate data from the SMMT shows car production rebounding in the first half of the year, reflecting greater confidence in the sector.


Pockets of growth and UKCA safety mark postponed

Strong pockets of growth exist across manufacturing, despite the sector’s overall contraction. Some of our clients are achieving major turnover growth, even up to 25% year-on-year. However, a major challenge for them is finding the staff they need to increase capacity and service demand.

Looking ahead, August’s PMI figures may also track greater optimism following the indefinite postponement of the UKCA safety mark for manufactured goods. Factories faced a near impossible task of securing the stamp across their product portfolios by 2025. It represented a major financial outlay for businesses, with little confidence that the UK and Europe’s testing house capacity could meet the required demand for the transition.

With UKCA mark uncertainty removed, manufacturers are better placed to focus on driving demand, growing skills and creating jobs.

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