Latest figures from the Office of National Statistics
are encouraging for manufacturing.
This time last year the term ‘green shoots’ was seen widely in
articles describing the latest economic news concerning the UK.
Conditions were largely seen to be improving and, although the
recovery was set to be long and hard, there remained a sense of
optimism that we’d get there slowly but surely.
Since then, however, the term has
been used more sparingly. Several false dawns and downbeat
reporting have tempered this positivity, as has the hard news that
the economy contracted by 0.2% during the final quarter of
What epitomises this trend for me
is the fate of manufacturing industry. This endured a mixed year
and ended it in the doldrums after the Office for National
Statistics (ONS) reported that
production sector output declined by 1.2% in the final quarter of
However, early indications of the
sector this year are encouraging. According to Markit/CIPS,
manufacturing output growth reached a ten-month high in
January as its PMI rose above the magic 50 mark, which represents
expansion, to 52.1.
Though caution is perhaps the
buzzword after the events of last year, it’s encouraging to see
that this growth was driven by new orders rising, payroll numbers
stabilising and cost pressures
What’s particularly interesting is
the recent upturn in new orders from overseas. This echoes the
latest trade deficit statistics from the ONS, with the deficit
falling to just £1.1bn (€1.3bn) at the end of November 2011 – the
lowest level since April 2003.
Even in the face of the rumbling
debt crisis in the eurozone, it’s great to see that export volumes
stood firm and it will be fascinating to see how this trend plays
out, especially in the first half of this year.
SMEs, however, continue to suffer
adversely from late payments and many could benefit from tailored
solutions such as invoice finance.
Evette Orams is managing director at Hilton-Baird Financial