Manufacturing recovery running out of steam

Posted on 2 Sep 2010 by The Manufacturer

The recovery manufacturing has enjoyed throughout much of 2010 is continuing but at significantly slower rate, according to the latest industry PMI from Markit and the Chartered Institute of Personnel and Development.

The survey for the Purchasing Managers Index found that not only did output growth slow in August, new orders have all but stagnated, indicating that firms who are still producing more are merely eating into backlogs. Based on previous trends, it would not be unusual for output to continue to grow in the coming months although the surveyors say optimism for the rest of the year is low and capacity and employment prospects are looking increasingly downcast.

Graeme Allinson, head of manufacturing at Barclays Corporate, said the manufacturing industry must now move out of its comfort zone in order to reinvigorate its recovery, in particular concentrating on growing exports to developing countries, creating jobs as well as replacing them and increasing non-essential investment, must concentrate on

“In comparison with other sectors we as a bank have seen very few bad debts within the manufacturing sector and virtually no write offs through the recession,” he said. “This shows manufacturing is already lean, but also points to a conservative sector, reluctant to take on more debt even if opportunities are presenting themselves and their bank is keen to lend to the sector, as we are. This in itself could hinder UK manufacturing more than any other factor.”