Great predictions for the manufacturing sector in 2017
2016 was a good year for the manufacturing sector in the UK, with the industrial renaissance pushing us into the top 10 in global rankings of the world. Starting in 2017, the manufacturing industry is now in a strong position for the new year.
Last month, the activity in the UK manufacturing sector hit a two and a half year high. The Markit/CIPS purchasing managers’ index (PMI) in manufacturing rose to 56.1 in December from 53.6 in November. In the PMI, figures over 50 strongly indicate expansion. Although there were many concerns following Brexit and the value of the pound dropping, the manufacturing sector has benefitted. The weaker pound boosted orders from overseas, and with these exports, Rob Dobson, a senior economist at IHS Markit has described the sector to start 2017 on a ‘strong footing’.
It is not only global exports which are supporting the manufacturing sector, although the growth is largely down to them. There are also stronger inflows of new work coming from domestic clients to boost competitiveness and encourage growth.
The growth of the sector, however, has also been met by price pressures. The weakness of the pound following the Brexit vote increased the price of imported goods, therefore leading to higher costs for manufacturers. According to the PMI survey, this led to inflation for input costs and output charges to remain as ‘among the fastest seen during the survey history’. James Knightly, an ING senior economists warns that the manufacturing boost many make the UK more competitive on the international stage but that there will be a negative impact from this for consumers.
The manufacturing sector should be very proud of its achievements for 2016, and the future predictions for 2017 seem very positive. The industry’s strong finish to 2016 continues to race forward demonstrated by the FTSE 100 reaching a record high of 7,205.21 on the first official trading day of the new year. Vogal Projects has many exciting prospects ahead for 2017, as we grow with the manufacturing industry’s success.