The latest Markit/CIPS UK Manufacturing PMI report was resoundingly positive, in contrast to November’s figures
, providing new hope for 2017. The latest Manufacturing PMI index posted at a 30-month high of 56.1 in December 2016; a very healthy rise against November’s figure of 53.6 and demonstrating growth across the UK manufacturing sector at its fastest rate since 2014. This strong figure exceeded the forecast expectations of 53.2 and stands far above the long-run average of 51.5. The survey showed that there has been expansion in the sector for each of the past five months. Rates of growth for production and new orders in December were among the best seen over the past two and a half years.
Weak sterling boosts exports
Companies benefited from stronger inflows of new work from both domestic and overseas clients, with overseas business aided by the boost to competitiveness from the weak sterling exchange rate.
New export business rose for the seventh consecutive month, with a rate of growth the second highest since early 2014, following hot on the heels of the particularly strong growth results we saw in September 2016. Companies surveyed registered increased business levels with Europe, the USA, China, the Middle East, India and other markets across Asia.
Strong cross-sector production and new business growth
Production and new business growth were broad based across the manufacturing industry, showing strong growth across the areas of consumer, intermediate and investment goods. However, the increases in the consumer goods sector were not as impressive as those in other areas.
Employment in the sector rises rapidly
Employment in the sector increased for the fifth consecutive month in December 2016, the fastest rate of jobs growth seen in 14 months. Businesses – both large and small – enjoyed staff growth, although SMEs saw the most noticeable increase in staffing levels.
Exchange rates pile the pressure on pricing
Price pressures remain elevated. Inflation for both input costs and output charges continued to be some of the fastest rates seen throughout the 25 years of this report. “These end of year results are encouraging and pave the way for a successful 2017 for the manufacturing sector,” comments David Johnson, Director at Halo Financial. “The remarkable difference from the previous month’s figures shows how quickly the markets can change and their effects on key business sectors. 75% of the companies surveyed referenced the exchange rate as a reason for increased costs, in addition to the rising costs of commodities, which, in turn, have their own effects on the currency markets. Investors are keeping a close eye on rising commodity related costs and continued sterling weakness.”
“Staying on top of the economic environment and its effects on manufacturing businesses is critical – currency exchange rates have an important role to play in the successes and stresses for all businesses trading internationally but the manufacturing sector is clearly in the thick of it, as this survey demonstrates, time and time again.”
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 and make money go further.
Halo Financial specialises in managing currency risk by offering hedging strategies and best execution for B2B and B2C clients with vertical expertise in numerous industry sectors such as international trade, financial, education, migration and overseas property. Staffed by qualified technical analysts, the company is authorised by the Financial Conduct Authority and HM Revenue and Customs.Halo Financial also received the Gold award of Best Supporting Service at the OPP awards, the Gold Award for Financial Support and Innovation from Re:Locate Magazine and has 5 out 5 star customer gold merchant status rating via independent review website, Feefo.com