Commenting on the latest CIPS UK Manufacturing Purchasing Managers’ Index, Mike Thornton, head of manufacturing at RSM, said: ‘The latest CIPS Manufacturing PMI highlights an optimistic start to 2017 – new orders are up, output has increased and employment levels remain strong, despite market uncertainty and increasing input costs.
‘This buoyant outlook for manufacturers reflects increased opportunities due to the low exchange rate and export activity. It’s also great to see a strong domestic market which signals manufacturers are taking advantage of opportunities internationally and closer to home.
‘The statistics reveal that manufacturers are passing on the input costs as output costs rose sharply, which is positive news. However, it will be interesting to see when consumers start to feel the pinch. The Consumer Prices Index is slowly creeping up, and many will have already noticed an upward change in petrol prices, but the real impact is yet to be felt which will have a profound impact on the UK economy.
‘This is not the only headwind that manufacturers will need to navigate. On a macro level, many manufacturers will be watching closely to the ramifications of Article 50, the fall out of Brexit and wider global political changes. We now know we are unlikely to be part of the single market following Brexit, but what the trade landscape will look like for UK manufacturers moving forward is unclear. Keeping an eye on developments is crucial to respond effectively, but in the meantime manufacturers will need to tread a fine line of seizing opportunities and hunkering down to preserve financial stability for any future turbulence.
‘Turning to more pressing deadlines, businesses in the UK with an annual pay bill of over £3m will be required to pay the apprenticeship levy from April 2017. This not only introduces increased financial pressures but many organisations are unprepared for the change due to late clarity on specifics of the scheme. Despite the uncertainty, manufacturers will still need to implement measures to deliver and resource apprenticeship training by April this year to maximise the benefits of the investment.’