Chris Barlow serves as the head of manufacturing to MHA. In light of the recent tax rises from the Chancellor, Chris explores the impact on the labour market for the manufacturing sector.
Manufacturing PMI has experienced a contraction for the fifth month in a row to 46.9; however, this is not as low as the flash estimate, which should be seen as something of a positive. Manufacturers continue to face ongoing supply chain issues and a fall in new orders which have been exacerbated by the Chancellor’s tax rises.
While our clients have now begun to take into account the tax rises and have built them into their plans for the next twelve months, this is heavily impacting the labour market, which has seen the deepest decline since the pandemic. Manufacturers will be very keen to avoid any further unpleasant surprises from the Chancellor next month in the Spring statement. Or, indeed, from Washington in the form of damaging tariffs.
On the more positive side the cut in interest rates was welcomed by the sector, but the impact of this will take some time to feed through, and any potential benefits that this may have brought will be negated by the rise in inflation.
The economy and manufacturers need growth, and the announcement of the government’s steel strategy is vital, however with no definite date for the wider Industrial Strategy, it is difficult to see where significant growth in the sector will come from. Manufacturers need the Industrial Strategy to give investors’ confidence, and it could potentially provide the light at the end of the tunnel for this hard pressed industry.
