Manufacturing News, May 2018

The upturn in the UK manufacturing sector slowed further at the start of the second quarter, according to the latest Markit/CIPS Purchasing Managers’ Index (PMI).

Rates of expansion eased for output, new orders and employment, in part reflecting a weakening in the pace of expansion of new work from abroad. On the price front, input cost and output charge inflation moderated and, although still elevated, re below the highs seen at the turn of the year.

The seasonally adjusted HIS Markit/CIPS 7-month low of 53.9 in April, Down from 54.9 1 March. The PMI has signalled expansion in each of the past 21 months.

Manufacturing production rose for the twenty-first month in a row. Companies reported that output was scaled up in response to higher intakes of new business, stronger client confidence, improved weather, new product launches and increased capacity. And output rose at consumer, intermediate and investment goods producers.

The latest survey provided further evidence of a slowdown in the rate of manufacturing expansion. Growth of output and new orders eased, while business optimism dipped to a five-month low. Falling backlogs of work, supply-chain constraints and rising stocks of finished goods also signalled that output growth will remain subdued in the coming months.

April also saw growth of new export business slow to a ten-month low. Rates of increase eased in the intermediate and investment goods sectors but strengthened at consumer goods producers. Where improved demand from overseas was reported, companies linked this to higher order intakes from Europe, the USA and Asia.

The rate of Input price inflation faced by UK manufacturers remained elevated in April, despite lasing to a nine-month low. Higher purchasing costs were attributed to increased commodity and raw material prices, in some cases exacerbated by demand exceeding supply. Shortages of certain inputs also led to further substantial lengthening of vendor lead times.


Britain’s manufacturers have called on the government to make faster progress on its industrial strategy to help address a slump in productivity in key sectors.

The EEF said an independent industrial strategy council – promised by the business secretary, Greg Clark, in last autumn’s white paper – should be created immediately and given the “urgent task” of setting clear goals for boosting Britain’s manufacturing performance.

The employers’ organisation said growth in manufacturing productivity, or output per hours worked, had fallen from 4.7% a year on average between 2000 and 2007 to 1% a year on average since 2008 – but said there had been big variations between different sectors of industry.

In a study comparing the UK with three other EU countries – Germany, Spain and Italy
the EEF found that Britain’s chemicals sector was becoming more competitive but that the pharmaceuticals sector had lost ground since 2008.

The Institute of Directors called the white paper a “big first step” while the TUC, the trade union representative body, questioned whether the £725M of investment outlined in the report was likely to prove adequate. The EEF said that, overall, Britain’s manufacturing productivity had been the weakest of the four countries since 2009, following a period in which it had performed more strongly.

The EEF said its initial assessment of the reasons for disparities in productivity performance had identified four factors:

Size mattered, with larger companies able to exploit economies of scale. Sectors with a higher share of larger firms tended to outperform internationally.

Boosting capital investment was not a silver bullet solution, so for some sectors significantly investing more may not bear fruit. Italy had higher levels of investment in capital equipment compared to Germany but productivity levels in Italy were weaker.

More UK manufacturing sectors undertook ancillary services as part of business operations compared to international counterparts. This suggested UK manufacturers were more likely to be at the end of value chains where the opportunities tor productivity growth could be lower but profits higher.

Management practices across UK manufacturing did not reflect international best practice, with a long tail of companies with poor management practices. Evidence suggested companies with better management capabilities were more likely to have higher rates of productivity growth.


Tata Steel Europe is looking at selling off two of its of non-core businesses in the Black Country. It follows a portfolio review by the steel group of all its businesses to assess the strategic fit and the future potential.

It has now begun a process of seeking buyers for five business units which supply products to niche markets, following the company to continue to strengthen its focus on strategic strip products and markets.

They include Engineering Steels Service Centre in Wolverhampton, which is a stockholder and processes engineering steels and employs 20, and Walsall-based Firsteel, which coats steel for kitchen bakeware and has a 50-strong workforce.

Following the potential sale of these business units, which employ a total of 1,100, Tata Steel Europe would continue to employ about 20,000 people manufacturing advanced products for the automotive, construction, engineering and packaging sectors.

Tata Steel currently employs about 750 in the Black Country, including its Steel park site at Waynesfield where 450 work and Brierley Hill, as well as the service centre at Horseley Fields and Firsteel in Brockhurst Crescent. i.e. combined the Tata Steel group is one of the top global steel companies, with an annual steel capacity of 27.5 million tonnes and almost 74,000 employees across five continents

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