Steve Harris, head of manufacturing and industrials at Lloyds Bank Commercial Banking
UK manufacturers now have greater certainty at home, thanks to the decisive result of the general election, and overseas, with evidence of the beginnings of a truce in the trade stand-off between Washington and Beijing. January’s PMI is a sign that factors like these are supporting order books as clarity begins to release pent-up investment.
Nevertheless, one of the difficulties is that the broader industry is being dragged down by an automotive sub-sector that accounts for 9% of activity but which separate data suggests is suffering the effects of a perfect storm of headwinds, including the UK’s future trading relationship with the EU, concerns about diesel vehicles and weaker consumer demand.
In our discussions a client suggested the election result had cleaned the Vaseline off one but not both of the sector’s lenses. While the Prime Minister now has a clear mandate to deliver Brexit, the widespread feeling in an export-focused industry is that the hard work of trade negotiation starts after 31st January.
Lee Collinson, Head of Manufacturing at Barclays
Today’s figures suggest a boost in confidence for UK manufacturing, following December's decisive election result with the uncertainty, that has sidelined much-needed investment, beginning to ease a little. With clarity, we now need to see some movement in manufacturers following through on plans to invest more in plant and machinery which will help to increase capacity and production, particularly in areas such as smart tech, which is vital if the sector is to and remain competitive at an international level. That said, with December’s figures showing that factory output had fallen at its fastest rate in eight years, there’s a lot of ground to make up from 2019 and this will continue to be hampered by a slowing global economy. What the sector now wants to see, and the sooner the better, is the all-important detail of new post-Brexit trading deals as it looks to ramp up investment and boost productivity.
Atul Kariya, Head of Manufacturing & Engineering at MHA MacIntyre Hudson
Businesses like stability and, regardless of people’s own views on recent political developments, we are now in a more stable period after a year of uncertainty in 2019. What this means for the manufacturing sector should be a small but steady recovery in the coming months for production, new orders and investment decisions that were perhaps previously delayed – and that is evident by the first rise to a neutral score of 50.0 since April 2019.
While it is still too early to say that all of these concerns are now over, there are of course still global economic factors that continue to impact the sector. That said, the movement of the PMI index score symbolises a more positive outlook for manufacturers at present.