Manufacturers buoyant despite production dip

Current levels are well above the post-Brexit collapse to 48.3 recorded in July, with anything above 50 being considered a sign of growth.

George Nikolaidis, senior economist at EEF, the manufacturers’ organisation, said: “Whilst manufacturing activity lost some momentum after solid post-referendum gains in the previous months, this doesn’t change the picture of improving fundamentals across manufacturing sub-sectors over the course of the year.”   

Nikolaidis suggested exchange rate pressures were at the centre of opportunities and challenges facing the sector.

“While the more competitive exchange rate means UK manufacturers are well positioned to capitalise on the recovery in demand in key export markets, higher input costs are coming through the manufacturing supply chain thick and fast to put the squeeze on profit margins.

“Manufacturers are inevitably looking to pass these costs on to customers, adding to the inflationary pressures already building up in the UK economy.”

Stephen Cooper, head of manufacturing at advisory services network KPMG UK, added that manufacturing also looks positive elsewhere, with the Eurozone, US and Japan all posting encouraging results.

“Overall, Christmas seems to have come early for global manufacturing.”

During September a report by EEF and banking firm Santander revealed the UK had become the world’s ninth largest industrial nation.

As expected, the largest individual manufacturing sector was shown to be food & drink, which comprises 17% of the UK’s $247 billion (£188bn) manufacturing output, EEF said.