After months of doom and gloom for UK industry, the latest figures on manufacturing output provide – on the surface at least – a glimmer of hope.
Following unprecedented declines during the height of the COVID-19 crisis, an increase in new orders; easing of lockdown measures; increased consumer confidence; and a modest improvement in exports have driven an increase in manufacturing output for three months in a row. Indeed, according to survey data from the UK manufacturing PMI, manufacturing output in August expanded at the fastest rate in six years.
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Whilst hailed by optimists as the start of the longed-for V-shaped recovery, others have sounded a more cautious note, warning that any recovery is coming from a historically low base and could be quickly strangled off by the twin threats of a COVID-resurgence and Brexit.
Either way, a growth in output is to be welcomed. And as MAKE UK economist, Fhaeen Khan commented, the latest figures highlight the key role that manufacturing will play in leading the UK’s economic recovery.
What is the situation at your workplace? Is a manufacturing recovery underway? Let us know in ‘comments’ below the line. All comments are moderated.
As in past crisise, it is likely that there will be some permanent damage which will not show up until later. Now would be a good time to review our expectations regarding work, leisure, travelling and so on.
Recovery?, some, things are picking up
V shaped, no. Recovery is/will be a lot slower than the drop off was.
Remember that the PMI is a measure of month-on-month change, not levels. It would be surprising (indeed, possibly unbelieveable) if there was not strong growth in output at the moment. For the PMI ouptut measure, the key is going to be how long it keeps growing – we need many months to make up for the losses back in March/April/May and if the growth stops soon (PMI heading back towards 50), that will be a bad sign.
Looking at the press release https://www.markiteconomics.com/Public/Home/PressRelease/762f9315aac14ae68efb2f7b117e0533 one can see that the ‘V’ IS there, on the graph on page 1 – whether it can be sustained is another matter. Another feature is the sheer rate of fall – and rise – in 2020, compared to the 2009 financial crisis. This time around there should be no shortage of credit, with the 100’s billions $/£/€ that governments have pumped into their economies across the world – and on an almost daily basis, I’m receiving unsolicited emails offering business loans well into five figures. To sum up – cautiously optimistic – so long as we don’t have to go into lockdown #2
Raising false hopes, I believe. If anyone thinks the economy is going to be back to ‘normal’ anytime soon they are sadly fooling themselves. And, let’s not forget manufacturing was in trouble long before CV-19, so a return to normal is what ? a return to being back in trouble !
And, although some might spin the affects of CV-19 against Brexit the reality is that Brexit will be the ‘coupe de grace’ for the economy.
“In fact, when measured in terms of their impact on the present value of UK GDP, the Brexit shock is forecast to be two to three times greater than the impact of COVID-19.” Ref: https://truepublica.org.uk/united-kingdom/a-no-deal-brexit-may-still-be-more-costly-than-covid-19/
Lack of investment, lack of foresight, lack of a strategy – the chickens are coming home to roost.
DEFINITELY no lockdown #2. That would be the last straw for many businesses.
Although he was a Tory, I’m a great fan of Michael Portillo’s Train journeys. What stands out time and time again, and really irks me, is the fact that the great British Railway infrastructure was provided to us by the Victorians (1837-1901) – and nothing of much consequence seems to have really happened since. Also, most of our modern railway stock seems to be manufactured and bought from abroad – why ?
We have a great opportunity with the railways, as one single example. All that work and expertise we could be utilising to uplift our Railway infrastructure across the country. All that work and expertise we could utilise to manufacture, and export, first class rolling stock for the 21st Century.
Instead the UK has become some sort of Victorian Britain Railway Museum. An international laughing stock that is wasting £100+ Billion on a high speed link between London and Birmingham, that no-one wants. I despair.
I think Covid showed the need for reshoring, but will the politicians act?
I would copy Japan & have a one billion pot to give grants to firms that return manufacturing from China to Britain.
I would cut business rates for industrial sites from 2 to 3 times the European average down to the European average.
I would dual the single carriageway A roads that run to left behind parts of Britain.
Agreeing with John Hartley’s comments: it seems that our leaders think that buying cheaper is good economics even when the employment is overseas and national security is threatened.
Agree with Jack Broughton and John Hartley. We should
manufacture in the UK if at all possible. We did eight years ago, and exports are growing. VERY satisfying. Absolute profit ls less important than keeping UK manufacturing and engineering.