UK manufacturing on upturn
The British manufacturing sector continues to grow, say KPMG
Stephen Cooper, head of manufacturing at KPMG UK commented on the CIPS / Markit manufacturing data published today. He said: “The UK manufacturing sector continues to show that it is on a recovery path, and growing. This, along with a marked easing of central bank lending conditions to businesses, and the general improvement in the wider UK economy as a whole, is good for manufacturers. This is shown in growth in new domestic orders. We do, however, need to watch UK deflation and its impact on costs and sale prices, as this may impact UK domestic demand, if not managed carefully.
“While UK domestic orders are growing, this is not reflected in UK exports. This is likely linked to the relative uncertainty in the markets of the rest of Europe, as Europe still accounts for some 40% of UK exports. The continuing debt repayment issues in Greece, which are still to be fully resolved with the Eurozone in the medium term, will have created some level of unsettlement in Europe. The Eurozone as a whole is showing mixed signs of recovery, with France and Austria seeing a fall in employment, while Ireland, Spain, Italy, Germany and the Netherlands are showing some improvement in manufacturing performance.
“On the wider global front, while China is seeing some upturn in manufacturing output, the growth in external demand is weak, which is not a good sign. The US on the other hand is showing strong growth. As a large world player, the USA upturn will likely have positive spin off for the UK.
“Relative to the world market, it is good to see that the UK manufacturing upturn is aligned with the positive growth in the US market, and both will hopefully continue on a winning track of growth. This is a big year for the UK as there is a UK general election looming, which hopefully will result in an outcome which continues to boost the UK manufacturing upturn.”
Consumer confidence has remained at 1 for February, according to GfK’s UK Consumer Confidence Index, following a slip in December 2014.
‘Expectations for the general economic situation’ saw the highest change in confidence caompared with last month, with an increase by four points to 3 – one point higher than this time last year.
But shoppers are most unsure about their savings, with the Savings Index decreasing by three points to -8.
Managing director of social research at GfK, Nick Moon, said: “The drop to -4 in December is looking more like a discrepancy. Other than that one month, the index has been at -1 plus or minus 2 for all of the last 11 months.
“Unless there is some dramatic change in the indicators that get media coverage, or people start feeling significantly better off as inflation edges towards 0, it is hard to see any major change between now and the election.”