Irwin Mitchell Comments On Latest Industry Statistics

UK manufacturing fell to a three-month low in January 2019, according to the first IHS Markit/CIPS UK Manufacturing Purchasing Managers’ Index of the year.

However, the figure of 52.8 remains above the all-important growth benchmark of 50.0. 

Meanwhile, in the Eurozone, output is up slightly, but the overall market lacks movement, with new business falling at the sharpest rate in nearly six years, with the final figure coming in at 50.5, as the sector starts to stagnate across Europe. 

New business and output growth have slowed however almost half of the UK manufacturing companies surveyed for the latest report remain positive, expecting increased output in the next 12 months. Nonetheless, the continued uncertainty over Brexit, exchange rate volatility and European economic slowdown fears have driven overall positive sentiment in the industry to the lowest in 30-months.

It’s a similar story across Europe, as global economic, political and trade worries continue to play on the minds and businesses of the manufacturers surveyed.

Expert Opinion

“The uncertainty of Brexit is affecting all areas of the economy and the manufacturing sector is no different. All eyes are now on Westminster to see what terms we will be leaving the EU on and whether we will have an orderly exit.

“According to our own economic research, if Theresa May succeeds in getting her Withdrawal Agreement through Parliament over the coming weeks, business investment will fall and unemployment will rise next year. However, even in a no-deal scenario, the UK economy will be in a stronger position than it was during the financial crisis of 2007/8.

“The impact of Brexit will be significant, but it won’t be as bad as many fear and it is reassuring to see that many leaders in the manufacturing sector agree and remain optimistic.”
Dorrien Peters - Partner

David Johnson, founding director at currency specialist, Halo Financial, remarked on the latest findings:

“Like the fluctuating growth results for the manufacturing sector, the Pound has been on a rollercoaster ride as Brexit uncertainty continues. While a weak Pound benefits UK exports, there are additional global trade threats affecting the supply chains and strategic planning efforts of manufacturers; factors like the US-China trade tensions and signs of an impending Eurozone economic crisis. Robust currency risk strategies, as part of overall Brexit and risk management planning, are vital as volatility will inevitably continue way beyond 31st March.”