Despite Fears of Recession, UK Manufacturers Stand Still

Michelle Remo, “Big 4″ observer
May 01, 2012 /

In the face of slowing down export demand and recessionary fears, the UK manufacturing sector remains relatively stable, though Europe remains a major concern and is becoming the elephant in the room, said a KPMG head.

Stephen Cooper, UK head of diversified industrials at KPMG, said the fluctuation in demand is expected and will continue throughout the year as the eurozone crisis remains at the helm of the current economic issue facing Europe.

His statement came on the heels of the Markit/CIPS Manufacturing Purchasing Managers’ Index (PMI) figures, which dropped to 50.5 in April from a downwardly revised 51.9 in March, keeping the sector just above the 50 level which separates growth from contraction.

“By all means, this doesn’t mean that manufacturing is losing its lustre as the economic climate remains uncertain,” Cooper said.

“Manufacturers are starting to feel the pinch of the eurozone crisis and are adjusting their business models to focus on their core business,” Cooper said.

The sectors growth has suffered a major setback amid the decrease in export demand. However, manufacturers need to focus on maintaining a “sound balance sheet and improving cash & working capital”, added Cooper.

The UK manufacturers are foreseen to continue facing the challenges around volatile input prices, competitive pressure on selling prices, uncertain demand and supply chain risks.

“There are however encouraging signs that manufacturers are already seeing beyond this and investing in the right places”, said Cooper.

“Overall, the months ahead will see peaks and troughs in demand and output but manufacturers are investing in long-term growth through innovation, partnerships and markets outside of the eurozone for top and bottom-line growth,” he said.

 

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