UK manufacturing performance remained solid as the first quarter of 2017 drew to a close, bolstered by a further boost from exports, according to the latest Markit/CIPS Purchasing Managers’ Index (PMI).
Despite a contraction in output and new orders, March remained well above the long-run average of 51.6 for UK manufacturing with an overall PMI score of 54.2.
According to Markit/CIPS, the domestic market was a key source of new business wins, alongside the continued weak sterling exchange proving a boon to exporters, both old and new alike.
Though a slight dip on February’s 54.5 score, March saw UK manufacturing remain above the neutral mark of 50.0 for the eighth successive month. The survey also demonstrated a positive outlook for the sector, with more than half (52%) of companies forecasting increased production in 12 months’ time, compared to just 6% anticipating a decline.
Director of customer relationships at the Chartered Institute of Procurement & Supply (CIPS), Duncan Brock explained: “Between the EU referendum in June 2017 and the triggering of Article 50 last week, British manufacturers have completed a remarkable return to confidence. However, with trouble brewing at the base of their supply chains, manufacturers must be wary of over confidence.”
Chief economist at EEF, Lee Hopley cautioned: “Today’s data certainly doesn’t set off any alarm bells, but it does signal that the consumer, one of the big props of UK growth in recent years, is already under the cosh and if there is any loss of momentum in the global economy, these strong manufacturing indicators could falter.”
Hopley aslo noted that the UK manufacturing PMI could provide an indicator of what may happen across the wider economy in the months ahead, with “a slight deceleration in activity driven mainly by consumer spending tempered by rising prices and squeezed real incomes.”
An issue also highlight by head of manufacturing at Barclays, Mike Rigby, who noted: “With inflation looming large, manufacturers should be increasingly conscious of the potential softening of UK domestic demand, which has been fuelling growth for some time.”
Head of UK manufacturing at Lloyds Bank Commercial Banking, Dave Atkinson commented: “The sector also has seen investment intentions returning regardless of the headwinds of inflationary pressure from import costs, the introduction of the apprenticeship levy and scheduled increases in the minimum wage.
“Although another successive month of slowing growth is disappointing, the underlying trend remains strong. Both home and overseas markets are contributing to growth and we hope to see firms’ confidence remain above the long-term average in the months ahead.”