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  • Views from the flipside

    Is Manufacturing bouncing back?

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Views from the flipside

manufacturing-bounces-back-460.jpgFollowing the recent Brexit vote, it seems that Britain’s manufacturers have shrugged off the UK’s decision to leave the EU.

The Markit/Cips UK Manufacturing PMI, which provides advance insight into the sector by tracking variables such as output, new orders, employment and prices, rose to 53.3 in August from 48.3 in July. That was the joint greatest month-to-month jump in the survey’s nearly 25-year history.

Rob Dobson, senior economist at IHS Markit, said: “Companies reported that work that had been postponed during July had now been restarted, as manufacturers and their clients started to regain a sense of returning to business as usual. The domestic market showed a marked recovery, especially for consumer products, while the recent depreciation of sterling drove higher inflows of new business from the US, Europe, Scandinavia, the Middle East and Asia.”

Manufacturing Crisis Averted?

Well, not quite. Despite production growing at its fastest pace in seven months, speaking to The Guardian, Lee Hopley, chief economist at the EEF manufacturers’ organisation, said the news “provides a lot of relief that manufacturing activity is still on the up” but that August’s performance was unlikely to be sustained.

He went on, “Inflation is raising its ugly head. It is too early to say whether the rebounds in growth and inflation will be sustained”.

Good time to invest in new equipment and jobs?

manufacturing-infographic-click.pngWith new export business growing at the fastest pace for 26 months and output prices also rising at the fastest pace for 5 years, it would appear like now was the ideal time for manufacturers to invest in new machinery and employees in order to continue the momentum and capitalise on these potential growth opportunities.

However, with the continued uncertainty about the future that Brexit offers, manufacturers may be put off from making crucial investments whilst maintaining cash flow remains a major influencing factor.

Why waste Cash?

The Annual Manufacturing Report 2016 details that an astounding 64% of manufacturers are not happy with their bank's current range of funding with 23% deeming funding inaccessible or difficult to obtain. Furthermore, 38% of manufacturers want to increase cash flow, but 54% used that cash to fund automation, with just 22% using Asset Finance.

That is why we have created our guide to 'Selecting the Right Finance'. In the guide, Manufacturers can easily discover what other finance options are available to them, such as short term business loans, longer term Business Development Loans and asset finance, and which of these finance solutions may suit their requirements best. Download the guide to learn more.

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By Ian Cushion
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