According to statistics taken from the latest Purchasing Managers' Index (PMI), the manufacturing sector is performing well showing an increase at 56.9, up from 55.3 in July. This uplift is predominately driven by production levels which picked up due to new orders – highlighting greater demand namely from domestic markets; but exports also remain robust.
Commenting on the data, Mike Thornton, head of manufacturing at RSM, said:
‘Manufacturers are clearly maximising the current economic situation and leveraging the weak pound, which has resulted in the expansion across all product categories, increased production levels, busy order books and an uplift in job creation. This continued growth, performance and optimism in the sector is great to see, but the key question is whether this is sustainable?
‘Almost a third of business already reported an increase in purchase prices due to raising input costs. Combine this price inflation and increase overheads with a potential shortage of staff and raw materials following Brexit and the sector looks set for more challenging times ahead.
‘Maximising the opportunities now is a sensible move, but manufacturers also need to focus on the fundamentals of cash flow management, process efficiencies and key innovation to ensure they are well place to navigate any future turbulence that may come.’