The manufacturing sector sunk to its lowest performance since May 2020 in August, but optimism for the 12 months ahead is higher than average for manufacturers in Greater Manchester.
According to the monthly S&P Global UK Manufacturing Purchasing Managers’ Index (PMI), in August 2023 output and new orders fell at the fastest rate for over three years.
Our Manufacturing Service has worked with a broad range of manufacturers over the past few years to tackle these issues through becoming leaner, learning organisations.
The sector has now been in contraction for over half a year. The manufacturers surveyed for the PMI blamed slow market conditions at home and abroad, with demand hit by a perfect storm of rising interest rates, the cost-of-living crisis and efforts by customers to reduce inventories. The research shows B2B manufacturers have been hit the hardest.
In Greater Manchester, SMEs continuing to struggle in the current economic landscape have been able to access expert support from GC Business Growth Hub’s specialist Manufacturing Service.
Results of the latest quarterly GC Business Survey to September 2023 suggest the city region’s manufacturing and engineering businesses are actually more optimistic about prospects for the year ahead than the average for all industries.
This is despite manufacturers facing the brunt of the ongoing challenges. Half of those surveyed in Greater Manchester said they are still facing rising costs and nearly two-fifths (37 per cent) are struggling with supply chain issues, compared to 42 per cent and 20 per cent respectively for all sectors on average.
Moving forward, a small saving grace from the current downturn is that lead times and prices are beginning to fall rapidly. Dr John Glen, Chief Economist at the Chartered Institute of Procurement & Supply (CIPS), which helps to produce the UK Manufacturing PMI, said:
“These are tough times for manufacturers. However, [in August] those firms with orders in hand enjoyed the fastest delivery times since January and the rate of inflationary rises slowed to 2016 levels. Small crumbs of comfort maybe as the sector remains in contraction.”