UK manufacturing on track for positive final quarter for 2017, but is it set to continue?

UK Manufacturing

Manufacturing is undeniably a strong industry in the UK, ranking eighth in global manufacturing and contributing to 10% of UK economic output. The industry now also appears to be on the rise, indicated by the output between October and November of 2017 having grown 0.4%.

This can be largely attributed to an increase in demand from export markets for UK goods due to the weak pound sterling; although, this is unlikely to lead to sustained growth. On the other hand, the industry is increasingly gaining the ability to produce higher value goods through new technology such as artificial intelligence and 3D printers with the Office of National Statistics (ONS) believing continued growth has been derived from improvements in automation and technology. The ONS also attributes growth to increased investment in research and development, employment of a skilled workforce, a change in production to high productivity goods, and an increasingly integrated global economy.

December 2017 was not quite the success story of its predecessor, with IHS Markit’s manufacturing purchasing managers’ index (PMI) for December at 56.3, lower than the 58.0 forecasted; albeit, a reading higher than 50 still indicates expansion in the industry.

As well, while October 2017 marked the 15th successive month of job creation in the industry, illustrating the growth that has taken hold, December looked less promising, with recruitment in the industry at its slowest in six months.

This incidence; however, proved to be a blip as growth remains solid in the sector. Rob Dobson, a director at IHS Markit, stating: “Although growth of output and new orders moderated during December, expansion remained comfortably above long-term trend rates. The sector has therefore broadly maintained its solid boost to broader economic expansion in the fourth quarter. The outlook is also reasonably bright, with over 50% of companies expecting production to be higher one year from now.”

In all, while manufacturing output is still below pre-recession levels, the industry, on the whole, has been increasing since 2015 and, according to PwC, broad sectoral trends are predicted to continue into 2018.


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