UK manufacturing output rises, but still faces steep climb to the top

With total production growing between December 2015 and January 2016, UK manufacturing output experienced the largest positive contribution, according to the latest ONS Index of Production.

Manufacturing output is estimated to have increased by 0.7% during the time period, more than twice the gain of total production – 0.3%.

The ONS noted that following two consecutive months of decline at the end of 2015, production output experienced “modest growth” in January 2016.

“Throughout the previous 12 months, manufacturing experienced alternating periods of expansion and contraction which have resulted in manufacturing levels being 0.1% lower than those recorded in January 2015,” the office stated.

Lee Hopley, chief economist, EEF.
Lee Hopley, chief economist, EEF.

Chief Economist at EEF, Lee Hopley highlighted: “Manufacturing output bounced back with the gains reasonably broad based across the sector.

“While this is consistent with the improving sentiment we’ve seen since the start of the year, it’s premature to call this a turning point for the sector.

“We’ve got decent consumer demand and a more competitive exchange rate providing a supporting role, but the major challenges of low commodity prices, emerging market weakness and elevated uncertainty are still very much in play at the start of 2016.”

Mike Rigby, head of manufacturing, transport and logistics, Barclays.
Mike Rigby, head of manufacturing, transport and logistics, Barclays.

Head of manufacturing at Barclays, Mike Rigby commented: “UK manufacturing recorded a welcome pick-up in output at the beginning of the year despite slowing global growth.

“However, exporters continue to have their work cut out with stronger competition and tough market conditions, in particular the impact of a strong pound against the euro but the recent easing in the strength of sterling may just be the spur manufacturers need to boost exports and help rebalance performance.”

Mark Stephenson, Deloitte
Mark Stephenson, UK manufacturing industry leader, Deloitte.

UK manufacturing industry leader at Deloitte, Mark Stephenson said: “The challenges UK manufacturers are up against should not be underestimated.

“Slow global economic growth; weak Chinese trade data; downgraded UK growth forecasts; turmoil in the steel industry, and the PMI at its lowest point for almost three years, are just some of the factors at play.

“Therefore today’s manufacturing output figures show how resilient the industry is and signals the prospect of a more positive year ahead for UK manufacturers.”