UK manufacturers have not been so confident about their near-term prospects in over two years, according to an industrial survey. In the latest snapshot of members of Make UK – a firm that enables manufacturers to connect, share, solve problems and create opportunities together – bosses are the most bullish about their prospects since the quarterly survey started measuring business confidence a decade ago.
The survey by the manufacturing bosses’ federation, which coincided with the weeks after the end of 14 years of Conservative government, found that 58 per cent believed their economic situation would improve through to the rest of the year. Activity in the UK’s manufacturing sector expanded at its fastest pace for more than 26 months adding to positive signs for economic growth.
The S&P Global UK manufacturing PMI survey came in at 52.5 for August, up from 52.1 in July and unchanged from the earlier “flash” estimate. The reading was in line with analysts’ expectations.
S&P’s survey, which measures economic activity in the private sector, is closely watched for signals about the performance of the economy. Anything above 50 indicates that the economy is growing, while a score below that suggest contraction.
The PMI has now signalled expansion in five out of the past six months, with the exception being April. Output, new orders and employment all continued to grow last month. The upturn is broad-based across manufacturing, with the investment goods sector the stand-out performer,” said Rob Dobson, director at S&P Global Market Intelligence.
The UK economy has staged a strong rebound from a shallow recession last year, growing 0.6 per cent in the second quarter. The UK was also the fastest-growing economy in the G7 in the first three months of 2024. The figures showed manufacturing production rose for its fourth straight month as computers raised output in response to higher new order intakes. Domestic demand helped offset a fall in export orders for the 31st month in a row.
“The upturn continues to be driven by the domestic market, which is helping to compensate for lost export orders,” Dobson said. He pinned the continuous fall in new business from overseas since early 2022 in weakness in Europe, a slowdown in mainland China and global uncertainty.
Looking at the next quarter, a balance of 33 per cent of bosses believed that both output and orders would improve. Similarly, recruitment intentions have fallen from a positive 26 per cent to -1 per cent, but a balance of 22 per cent indicate that they will be hiring. As a result of the findings , Make UK upgraded its forecast for growth in the whole economy next year from 0.8 per cent to 1.8 per cent.
“With an autumn budget and spending review fast approaching now is the time for the government to pick up the pace and deliver on pre-election promises, most notably the publication of a long-term robust industrial strategy,” Fhaheen Khan, Make UK’s senior economist said. “This must be combined with policy levers that help not hinder growth and international competitiveness”.
Make UK wants the government to rapidly harmonise with the European Union’s carbon border adjustment mechanism, which taxes import of carbon dioxide-intensive goods such as steel and cement from Asia and north Africa to prevent the dumping of cheap imported products to the detriment of domestic players.
It also wants matters to sort out problems with the apprenticeships levy policy, which was introduced nearly a decade ago to boost training. According to Make UK, it has resulted in a “disastrous” 40 per cent drop in apprentice starts. Make UK survey of more than 300 of its member companies took place over four weeks to the end of August. (The writer is our foreign correspondent based in the UK)
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