UK Manufacturing PMI: Output set to grow as manufacturers eye crucial autumn budget
Following the release of the latest UK Manufacturing PMI on October 1, Iain Black, Partner at MHA, believes that high demand is emboldening manufacturers to pull the trigger on new investments, but the Chancellor’s autumn budget (on 27 October) will be vital to help sustain recent sector growth:
“High demand over recent months, alongside the UK’s super deduction tax relief, has put many manufacturers in an ideal position to press the button on transformative investment decisions they have been holding back on for the last 18 months. As confidence rises throughout the sector, we expect domestic and export order books will continue to swell.
“UK manufacturing output is expected to increase in the next few months as goods start flowing more freely. This is despite raw material and component supply shortages in the immediate term set to continue hindering certain sectors, such as automotive and electrical good, and global freight issues unlikely to ease until 2022.
“However, manufacturing businesses are facing a myriad of supply chain issues impacting their production capabilities and jeopardising their ability to deliver on the increased demand. Sky-rocketing transport and fuel prices are stressing margins, leaving customers to pick up the increased costs. The sector’s ubiquitous skills shortage has also created an employee-led market with wage inflation and unwelcome job-hopping.
“All eyes of manufacturers will be on the looming government autumn budget on 27 October. They will be urging the Chancellor to announce healthy capital investment incentives, alongside much needed new measures to strengthen the manufacturing sector now that Brexit is bedding in. Just as importantly, the government must introduce measures to further stimulate research and development and take a long hard and overdue look at business rates to inject greater confidence for manufacturers as the UK continues its road to recovery.”