‘From expansion to stagnation’

Chris Forrest, Head of the Yorkshire Region, at Barclays Corporate
Chris Forrest, Head of the Yorkshire Region, at Barclays Corporate
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Manufacturing has moved from rapid expansion to near stagnation, according to the latest study carried out for the Chartered Institute of Purchasing & Supply.

Rob Dobson, senior economist at business research group Markit and author of the Manufacturing Purchasing Managers Index report says the weakness of the UK market was the key factor pushing the index down to a 20 month low.

But, manufacturing’s problems were made worse by additional bank holidays in late April and continuing disruption of the supply chain, following the Japanese earthquake.

“On the plus side, job creation held up comparatively well in May, while inflation of input costs and factory gate prices moderated following recent declines in the price of oil and other commodities. However, continuing the increase in employment will be reliant on the trends in order books and output improving,” he said.

Commenting on the survey, Chris Forrest, Barclays Corporate’s head of manufacturing in the north, says all is not gloom.

One positive in UK manufacturing today is increasing levels of liquidity in the sector,” said Mr Forrest.

“As recent EEF figures demonstrate, in part this is because bank lending to the sector is on the rise. Private equity also seems to be coming back to the party, with investment activity beginning to pick up. This is a positive trend and needs to continue to keep the sector growing through 2011 and beyond.”