Back at the beginning of the downturn, there was lots of complaining about how the UK economy was too service-led, depending too much on imports and not enough on its own, once-glorious, manufacturing industry.
Now there are signs attempts to resurrect ‘Made in Britain’ have worked: sterling was up 0.425 against the euro this morning, a two-month high, after figures from Markit and the Chartered Institute of Purchasing & Supply showed during August manufacturing rose at its fastest rate for more than two and a half years. The purchasing managers’ index rose to 57.2, up from 54.8 (anything below 50 shows a decline in activity).
‘The UK’s factories are booming again,’ enthused Markit senior economist Rob Dobson. ‘Manufacturing is clearly making a strong positive contribution to the economy, providing welcome evidence that the long-awaited rebalancing of the economy towards manufacturing and exports is at last starting to take place now our export markets are recovering.’
He may be a touch over-zealous about the ‘export’ part of that, mind. Although new orders rose at their fastest pace since 1994, the majority of growth was through domestic demand, rather than orders from outside the UK.
If the sector really wants to grow, it needs to jump on the emerging markets bandwagon and start peddling its wares – and expertise in high-quality manufacturing – to high-growth economies such as China and, to a lesser extent, India (not that it's done much in the way of growth over recent months...). We may have spent the past few years outsourcing all our manufacturing to those economies, but when it comes to the fiddly stuff – microchip design, nanotech and cleantech – we’re the best in the world.
Manufacturers added that they’d experienced price pressure, particularly on raw materials such as commodities, feedstock, oil, paper, polymers and timber – which means the sector is unlikely to increase jobs anytime soon.
So things aren’t all peachy yet – but, as with the rest of economy, they’re definitely looking up.