Justin Benson, director in KPMG's manufacturing team, comments on the CIPS/Markit manufacturing PMI figures published today. He said "just a short week ago, we would have been glad for results like this. The PMI is at its highest level since January, indicating growth in the manufacturing sector, due to increases in new orders both domestically and internationally, and an increase in purchasing activity. However, we must wait for July’s PMI results to see what effect the EU referendum and recent market volatility will have. In the short term, with the devaluation of the sterling following the referendum, there will be a positive effect on UK manufacturing exports. The UK’s exports will be more competitively priced and the PMI could continue to offer strong results in the coming 3 to 6 months. Longer term, it remains to be seen how much of an effect import inflationary pressures and the political and economic uncertainty will have on the PMI."
Commenting on today’s PMI data, Ms Lee Hopley, Chief Economist at EEF, the manufacturers’ organisation, said that today’s PMI gives us another positive data point for the UK’s manufacturing sector. The pick-up in output and sales components and the relative strength of the manufacturing PMIs across most of Europe would, in other circumstances, have reinforced our view that the worst of the downturn seen in the previous 18 months was now behind us. But with economic and political uncertainty ramping up in the wake of the referendum, all today’s data is showing us is what we could have won. The future path of demand, investment and employment across the sector is very unclear and while we continue to see fundamental strengths across many parts of industry, short term data movements are nigh-on impossible to predict.