Despite Rising Costs UK Manufacturing Remains Bouyant : “With another month of PMI data above the long-run average, and solidly in expansion territory, manufacturers must surely have a spring in their step this month,” said Justin Benson, a Director at KPMG

Commenting on the recently revealed Markit/CIPS UK Manufacturing PMI figures, Justin Benson, a director in KPMG’s manufacturing practice, said UK manufacturers had every reason to have a spring in their step.

He said, Albeit at a slower pace, another increase in new order volumes, driven mainly by overseas orders, has meant that almost 50% of UK manufacturers expect production to be higher in 12 months’ time. Despite the increase in input costs, business confidence is on the rise, leading to further job creation across the spectrum of manufacturers, from small to large.

KPMG’s Rethink Manufacturing survey has shown that two thirds of UK manufacturers expect to offset rising costs by either achieving saving elsewhere, or absorbing them. Pressures on margins will increase, leading to potential price rises and increased risk in the supply chain. Therefore, manufacturers need greater transparency in order to spot potential risks to future supply of key components early, keep a close eye on cash/working capital and ensure contingency plans are in place.