The recovery of the manufacturing sector has seen a postive start to the second half of 2024 with growth in output, new orders and employment strengthening the industry.
That’s according to our head of manufacturing, Chris Barlow, who was commenting on the latest data showing the UK manufacturing sector is returning to stability.
The S&P Global UK Manufacturing Purchasing Managers’ Index (PMI) rose to 52.1 in July, up from 50.9 in June, its highest reading since July 2022. Positive sentiment rose to its highest level since early-2022, with 63% of companies expecting output to expand over the coming year.
Chris Barlow, head of manufacturing, said:
“The increase in manufacturing PMI to 52.1 for July is very positive news for the sector, and it seems that with the election out of the way, there is some sense of stability returning.
“While the problems for the manufacturing industry are well documented, it seems as though we are turning a corner. Output and orders have both grown, and most significantly, there has been an increase in the workforce for the first time in almost two years.
“Manufacturers will be awaiting the interest rate decision this afternoon with much anticipation. If they are cut, whether now or in September there is likely to be further movement from the sector in terms of investment.
Chris, who works with entrepreneurial and owner managed businesses, added:
“In addition to a cut in rates, the manufacturing sector is also eagerly awaiting further announcements on the new government’s industrial strategy which is desperately required for growth and to encourage investment into the UK.
“There are three major challenges that the new government should be looking to fix, particularly if it wants to regain its spot within the world’s top ten manufacturers. The first is investment. There is growing consensus that the National Wealth Fund could be the impetus that manufacturers need to start investing but that depends on the fine print, without this detail there is unlikely to be any movement.
“The second is skills. The shortage of skills has been a perennial Achilles heel for manufacturers for years. The Apprenticeship Levy that was introduced in 2017 has not had the desired impact. The problem has been exacerbated by preventing the freedom of movement of workers.
“The third is to improve the trading relationship with the rest of Europe. Significant supply chain problems still remain post-Brexit and the ports are woefully underprepared for the new customs checks which were introduced earlier this year.”
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