Figure released this week suggest that the rate of UK manufacturing has risen for the eleventh straight month. Considered the longevity of the rise of manufacturing rates these figures act to further underscore the role this pivotal industry is playing the sustained recovery of the UK economy.
According to the Markit Purchasing Manager’s Index survey, data this month has concluded that whilst a growth in the rate of manufacturing suggests a rebound, bank lending data has held flat for the previous month. Coupled with high energy costs and skills shortages, experts predict that flat bank lending rates could still be preventing the manufacturing industry from recognising its full potential.
Specifically the survey released data suggesting that manufacturing market activity had seen its eleventh month of consecutive gains. However separate data brought to the attention of the industry by the Bank of England suggesting only mild gains in the number of loans provided to businesses in the manufacturing sector. This number totalled £100 million in January. This is fact still negative after trends last year in this sector, measuring on the scale -2.2%
Considering that the rates of lending to manufacturing companies only saw slight gains, the other areas of the lending industry, according to the nation’s central Bank, saw significant gains. Consumer lending continued the meteoric rise it has enjoyed due to the economic recovery and mortgage approvals have climbed to a six year high.
Whilst manufacturing actually accounts for 10% of the nation’s recorded economic output, its role across a breadth of industries means that many see it as a vital to the UK economy. Furthermore the British government has touted the industry as one essential for rebalancing UK economic strength from reliance on consumption and services.
Theoretically the government has long had the target of doubling UK exports to £1 trillion by 2020, however despite the rate of the economic recovery; it may be an unrealistic goal. At the moment the rate of output in the sector, despite rises, still remains 9% below pre-crisis levels. Furthermore British GDP still stands 1.4% below the rate it held at before 2008.
Considering that the manufacturing PMI did manage to climb to 56.9 in February, it’s clear that the manufacturing industry is contributing to the economic recovery. However mitigating factors such as flat bank lending rates to manufacturing companies mean that government estimates of the industry may be too optimistic.