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May 2017

More good news for UK manufacturers – but beware rising costs

Published: Monday 22 May 2017

The latest Confederation of British Industry (CBI) Industrial Trends Survey spells more good news for UK manufacturers – but increasing costs cast a shadow over the horizon.
 
By Rachael Kinsella
The survey of over 400 manufacturers showed that their order books were at more than a two-year high, going up to the very positive levels we saw earlier this year.  Output growth also increased the most for three and a half years, showing impressive growth over the last quarter and strong demand for exports. Manufacturers are confident that production levels will continue to rise.

However, pricing pressures remain; the industry predicts a considerable increase in selling prices, although cost pressures are not as high as they were in February when we saw a significant spike.

David Kerns, commercial development lead for Halo Financial, commented, “It’s great to see strong demand for UK manufacturing output and continued growth in the sector, both throughout the UK and overseas."
 

 
“However, rising cost pressures are likely to have notable knock-on effects on the industry’s growth if they continue at the current pace. UK manufacturers, importers and exporters need to look at their business models and overall strategy to identify any savings that may serve to counteract rising prices. The effects of volatile currency markets on costs at every stage of the chain should also be considered carefully and an international payments strategy assessed for cost efficiencies.”

Neil Lloyd, sales director at FBC Manby Bowdler, welcomed the results. “This report is most welcome and provides further evidence that UK manufacturing is performing strongly.  The story of strengthening order books and strong output growth mirrors what our clients are telling us. However, inflation and fluctuating currencies remain a challenge, I think, for the foreseeable future.”

Atul Kariya, national sector head for manufacturing and engineering at MHA MacIntyre Hudson, said: “This is all very positive news; and it’s reassuring to see strong demand, robust order books and increasing output growth once again.”

“The cost pressures are no surprise – they have been building for some time, as we have counselled before, and show no signs of slowing down. The challenge for manufacturers now is how to deal with these rising costs – is it better for the business to take the hit on the costs or to pass them on to customers?”

He added, “Inflationary pressures and the increasing concerns over skills and labour shortages in the industry are the clouds looming on the horizon. These challenges need to be factored in to business plans as soon as possible to mitigate the associated risks on business growth and profitability.”

About Halo Financial

 
Halo Financial is a leading UK foreign exchange brokerage, offering a comprehensive range of services to individuals and businesses since its inception in 2005. The business prides itself on offering a flexible and personalised approach for each of its clients, simplifying the seemingly complex foreign exchange market to maximise savings in currency transactions, protect against currency risk and make money go further.
 
Staffed by qualified technical analysts, the company is authorised by the Financial Conduct Authority and HM Revenue and Customs.
 
Halo Financial won Best Customer Focus category in the 2016 Best Business Awards; received OPP Gold for Best Supporting Service; the Gold Award for Financial Support and Innovation from Relocate Magazine, Commendations in the 2016 and 2017 Moneyfacts Awards and has 5 out 5 Star Customer Gold Merchant Status via independent review website, Feefo.com, winning Gold Trusted Service from Feefo for 2017.

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