In last month’s issue, Drives & Controls reported that the UK manufacturing sector had achieved a significant milestone, with the S&P Global UK Manufacturing PMI reaching 50.3 – the first time it had crossed the neutral mark of 50.0 since July 2021. This surge signals a return to growth after a year-long downturn, and it’s worth exploring the factors that contributed to this. The global pandemic now feels like a lifetime ago and life has changed considerably since then, but the easing of pandemic-related restrictions and vaccination efforts has certainly played a pivotal role in the sector’s resurgence. As economies reopened, pent-up demand surged, boosting manufacturing activity. Of course, this began some time ago, but there is a time lag when it comes to the full effects of such changes. What was clear – and this is confirmed by Gambica’s members – was that manufacturers were able to find markets beyond their borders hungry for their products. The UK experienced a major rise in exports which was evident during and after the pandemic. However, while growth is exciting, it also comes with challenges. Suppliers struggled to keep up with the increased demand, resulting in longer lead times, delays to deliveries, and shortages of components. This was coupled with UK manufacturers struggling to source materials from abroad. Electronics, plastics, metals and other commodities faced major shortages, and transportation delays compounded the issue. Consequently, manufacturers faced rising costs for supplies, which they passed on by increasing their own prices. Not to mention the rising energy costs which inflated all of the above. Nevertheless, the PMI suggests that we have been resilient and have emerged from this struggle. How can the UK manufacturing sector maintain this momentum? One way that I mentioned in an article earlier this year is through government support. Manufacturers cannot maintain this growth by themselves. They need the right environment in which to thrive. The UK government should look at how it can help to maintain this growth – such as making the annual investment allowance a permanent increase. This would encourage investment in capital assets. In addition, restoring initiatives such as the Super Deduction scheme from 2021-2023 would encourage long-term stability within the sector. In our manifesto earlier this year, Gambica proposed a long-term industrial strategy to the government. Recent announcements show that this is being considered, although there has been no direct confirmation. Investment opportunities are becoming clearly visible. However, with unemployment still on the rise, we must not neglect recruitment of future generations and improving output. It is also important that we examine apprenticeships in our sector, especially the levy. Apprenticeships are the lifeblood of manufacturing. However, their numbers have declined in recent years. Greater investment in apprenticeships would make a significant difference in supporting growth. Encouraging greater flexibility will improve this for employers. The PMI is a crucial economic indicator that provides insights into the prevailing direction of economic trends. As it is a diffusion index, it condenses a wide range of data into a single number that reflects overall sentiment. The recent PMI figures reflected what we’ve been seeing in statistical data from our members in Gambica. The UK manufacturing sector faced challenges at the end of Q3 2023. While output and new orders appeared to increase, there was a drop in demand from both domestic and foreign markets. We’ve noticed a resurgence since May this year, coupled with a much more positive outlook among manufacturers. The recent rise in the PMI suggests economic recovery, but it also adds to inflation concerns. Often the Bank of England’s decisions on interest rates take the PMI trends into consideration. The PMI acts as a compass for economic trends, guiding decision-makers, analysts and investors. But it must be remembered it is just a guide, and that the manufacturing sector isn’t just about machines – it’s about people, innovation, and flexibility. This surge in the UK’s manufacturing PMI is certainly a cause for optimism, but sustaining growth requires concerted effort. By fostering collaboration, investing wisely, and nurturing talent, the UK manufacturing sector can ride this wave towards a prosperous future. n * Gambica is the trade association for the automation, control, instrumentation and laboratory technology sectors in the UK. You can get in touch with Nikesh Mistry on 020 7642 8094 or nikesh.mistry@gambica.org.uk, or via the Gambica Web site: www.gambica.org.uk What lies behind the positive PMI figures? Recent PMI numbers have indicated a return to growth for the UK manufacturing sector for the first time in several years. Nikesh Mistry*, Gambica’s sector head for automation, examines the implications. The recent PMI figures reflected what we’ve been seeing in statistical data from our members in Gambica. October 2024 www.drivesncontrols.com 44
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