Global export markets depress UK manufacturing output, says KPMG

Posted on 1 Dec 2011

KPMG is a global network of  Audit, Tax and Advisory services firms. John Leech, partner in KPMG’s automotive practice, comments on the Purchasing Managers’ Index (PMI) data published today by Markit/Chartered Institute of Purchasing and Supply (CIPS):

“The manufacturing sector in the UK is starting to feel the impact of the slowdown in global markets.  Data from Markit/CIPS UK manufacturing PMI shows that figures have contracted for the second successive month in November, down to 47.6.

Orders from export markets continue to drop as the Eurozone crisis damages business confidence and, as a result, weakens demand in the US and Asia as well as Europe.

But how resilient are UK manufacturers? Those exposed mainly to UK and Eurozone customers are at most risk but even those that export to the US and Asia will experience more challenging conditions.  We expect that next year will be a bumpy ride for manufacturers as conditions in the global markets are expected to worsen.

Despite these macroeconomic concerns, there is hope. With the exchange rate being relatively weak at present UK exports are more price competitive and UK manufacturers are looking to see if they can increase local content within its supply chains.  Overseas investors have noticed and a string of important inward investments in recent months by Tata Motors, BMW and Toyota will continue to support the UK’s manufacturing base.”