Manufacturers still feeling the pinch, says Lancashire advisor

By MHA

02 May 2024

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The challenging economic conditions are continuing to have an impact on Lancashire manufacturers, according to a leading business advisor in the region.

Ginni Cooper, partner at accountancy and advisory firm MHA, says rises in raw material costs and the increase in the National Living Wage are two factors impacting on the bottom line of manufacturing firms.

Ginni was commenting after updated UK Manufacturing PMI (Purchasing Managers’ Index) data, released today (May 1), showed that output and new orders both contracted in April. 

However, the data also shows that business optimism remains positive in the sector, with over half of companies (52 per cent) forecasting that output will increase over the coming year.

Ginni, who advises manufacturing and engineering businesses across the region, said: “The economic environment remains challenging, and there continue to be external forces outside the control of the sector which are putting real pressure on manufacturing businesses, and which is dampening confidence. 

“We’re hearing from our clients that the increase in the national living wage is a real pinch point. This, coupled with successive price rises in the cost of raw materials, has impacted the bottom line of many manufacturing businesses who often operate with slim profit margins.

“In addition, the changing mood music on when interest rates will be cut and the possibility this may not be until after the summer is holding back companies from investing in growth.

“The squeeze on cashflow means manufacturers are very much still in survival mode and are less focused on their efforts to be more sustainable despite the potential attraction to customers.”   

The S&P Global UK Manufacturing PMI for April stands at 49.1, down from March’s 20-month high of 50.3.

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