Manufacturing leading the way out of the UK recession

First posted 3rd October 2013

The UK's manufacturing sector grew in September, the 6th month of solid growth in a row, which is fantastic news. Unfortunately, this positive trend has also significantly increased the likelihood of the Bank of England raising interest rates sooner, possibly as early as the beginning of 2015.

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While it's probably too early to say that the UK has "turned a corner" after the economic crisis that has irritated the world like a nappy rash (to put it mildly), for the past few years, there are a few hopeful signs. One such sign is that manufacturing output in the UK has risen steadily over the past 6 months, a robust growth that has put the industry ahead of many competing international markets.

This growth has been measured by the Purchasing Manager's Index (PMI) from the financial information services of Markit and the Chartered Institute of Purchase and Supply (CIPS). It's a measure of income, forex, futures and options markets - but you won't be required to remember a thing about the measurement unless you're a student of horridly complicated financial. Suffice it to say that the PMI looks good, especially when we compare it to the other big countries.

 

With the UK's PMI at 56.7 for September, The US was at 52.8, Japan at 52.5 and Germany rose to 51.1. The PMI for Europe overall was 51.1, which means that UK manufacturing is doing rather well for itself at the moment.

This good news is tempered with the knowledge that such decent and swift growth has significantly more likely that the Bank of England will increase interest rates sometime in the next 18 months. Oh well, it's all part of the plan to get the global economy back on track, so we suppose we can't complain (although we probably will anyway.)

On that note, a recent study by RBS showed that the UK’s SMEs are having to refuse billions of pounds in new business (£5.4 billion in fact) because of their reluctance to invest in the equipment they would need to take these deals on. Which is where Clear Asset Finance comes in, naturally.

In slightly more down-to-earth practical terms, this healthy growth has led to the highest number of jobs created in the sector in the last 28 months. The hope is that this trend over the last six months will continue, spurring on the economy at large, to the point where the UK is no longer at risk of dipping back into recession. As we all know, however, finance is a tricky beast at the best of times. It's best not to rest on our laurels.

SMEs are understandably hesitant in tying up their rather useful working cashflow into a piece of equipment that will deteriorate in value after a few years. Leasing solves those problems, and comes with even more benefits to boot. The report by RBS suggests that it is through leasing that UK industry will be able to keep its growth so healthy.

So there you have it, folks, lease long, lease proud, and let your business grow. It is, in fact, your civil duty to support your country in times of economic hardship (we're definitely not exaggerating there), and we at Clear are more than happy to help with honest and dedicated support.