Manufacturing slows as weaker pound eats into margins

UK manufacturing slowed last month as the weaker pound began to eat into the margins of many firms.

However, the very weakness of sterling is also having the effect of making British-made goods more attractive to foreign buyers.

The mixed bag was reflected in the response to the Markit/CIPS purchasing managers’ index (PMI) for November.

The index fell to 53.4 from 54.2 in October; however, any figure above 50 still represents growth.

So, while currency fluctuations post-Brexit pushed up costs for many manufacturers, other firms reported more demand from the United States, Europe, and the Middle East for the cheaper goods.

Dave Atkinson, Birmingham-based Head of Manufacturing at Lloyds Bank Commercial Banking, said: “This performance demonstrates the ongoing resilience of the sector, as well as its ability to be agile in maximising opportunities amid a backdrop of rising input costs and the weaker pound.
 
“Going forward, an industry-wide improvement in productivity is important as Britain looks to match the progress of its G7 peers in order to compete fully on the global stage.”
 
He said a recent report by the bank had highlighted that improving production rates was seen by businesses as the number one reason to invest – with two thirds of firms having already formed a plan for productivity growth.

“These findings, together with the focus on productivity announced in the Chancellor’s Autumn Statement, suggest there are reasons for optimism when it comes to ensuring that manufacturers can boost outputs and profitability,” he added.