“The UK manufacturing sector continues to show that it is on a recovery path, and growing. This, along with a marked easing of central bank lending conditions to businesses, and the general improvement in the wider UK economy as a whole, is good for manufacturers. This is shown in growth in new domestic orders. We do, however, need to watch UK deflation and its impact on costs and sale prices, as this may impact UK domestic demand, if not managed carefully.
“While UK domestic orders are growing, this is not reflected in UK exports. This is likely linked to the relative uncertainty in the markets of the rest of Europe, as Europe still accounts for some 40% of UK exports. The continuing debt repayment issues in Greece, which are still to be fully resolved with the Eurozone in the medium term, will have created some level of unsettlement in Europe. The Eurozone as a whole is showing mixed signs of recovery, with France and Austria seeing a fall in employment, while Ireland, Spain, Italy, Germany and the Netherlands are showing some improvement in manufacturing performance.
“On the wider global front, while China is seeing some upturn in manufacturing output, the growth in external demand is weak, which is not a good sign. The US on the other hand is showing strong growth. As a large world player, the USA upturn will likely have positive spin off for the UK.
“Relative to the world market, it is good to see that the UK manufacturing upturn is aligned with the positive growth in the US market, and both will hopefully continue on a winning track of growth. This is a big year for the UK as there is a UK general election looming, which hopefully will result in an outcome which continues to boost the UK manufacturing upturn.”
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Nahidur Rahman, KPMG Press Office
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KPMG LLP, a UK limited liability partnership, operates from 22 offices across the UK with approximately 12,000 partners and staff. The UK firm recorded a turnover of £1.9 billion in the year ended September 2014. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. It operates in 155 countries and has 162,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.
This article represents the views of the author only, and does not necessarily represent the views or professional advice of KPMG in the UK.