United Kingdom
What next for the manufacturing sector? - Tom Lawton
The manufacturing sector is generally positive about the economy according to our recent research, which looked at confidence levels in the sector over the next six months.
The overall numbers were more positive than we were expecting, and there are indications that the sector is starting to improve, following an extremely difficult year.
Our survey results are being reinforced by the latest market data, with the UK PMI rising into positive territory for the first time since March 2008 with recorded rises in orders and output in July.
However, despite recent stimulus packages, the influence that the Government has going forward in leading the recovery of the economy has also proved a concern. It’s interesting to note that a number of companies of all sizes cite government red tape as one of their biggest headaches.
“There is a marked increase in the time it takes to get export licences even for sending the same equipment to the same customer as before. Something has changed for the worse!” stated one respondent to the survey.
For both larger businesses (turnover of more than £300m) and smaller businesses (turnover of less than £300m), the most pressing issues were cash flow and sales.
Companies also voiced a number of other concerns, including:
- Inability to insure debts
- Increasing government red tape
- Credit insurance on new foreign accounts
- Avoiding breaching financial covenants set by our bank.
- Strength/weakness of the GBP. The majority of goods are purchased in USD so the weakness of the pound has had a direct impact on our margins.
Whilst the numbers in this survey have proved promising, the good times aren’t upon us just yet. Many are predicting that the economic turmoil will begin to ease by Q4 2009, but the Manufacturing industry is right to air on the side of caution.
For general information on the 60 second survey, please contact Julie Barrett or Chris Parsons on 020 7893 3054 or 020 7893 2208.