The UK’s manufacturing sector fell by almost 10%. | So Good News
The number of UK manufacturing businesses fell by 10 per cent last year, while trade fell by 9.2 per cent, according to figures from the Office for National Statistics (ONS).
The number of manufacturing jobs in the UK is expected to fall from 270,000 at the start of 2021 to 244,140 a year, raising concerns about the country’s future financial stability.
The decrease in the number of companies in the sector is related to the decrease in the number of orders; Output fell for a third straight month in September 2022 and orders fell for a fourth straight month, according to analysis by S&P Global.
Trade in the sector is expected to fall by 9.2 per cent in 2022, from £636bn to £577bn, while the number of people employed in manufacturing has fallen by 1.7 per cent compared to the previous year, official figures show.
In comparison, the overall number of businesses in the UK fell by 1.5% over the same period, as input costs and input cost inflation rates accelerated significantly across all sectors.
“The manufacturing sector has had a challenging time, with the number of businesses down by almost 10 per cent – far less than the UK’s total economic loss,” said Mark Tighe, CEO of innovation finance specialist Mark Tighe. CataxCommenting on the data.
“The continued fall in output and orders is a concern for advanced manufacturing, which is still seen as part of the UK’s future growth trajectory,” he added. “A significantly weaker pound could impact turnover this year,” he said.
Most manufacturers are linked to lower production and job cuts, according to S&P Global.
Compared to previous years, in 2022, companies face tougher conditions in both domestic and export markets. rising uncertainty; high transportation costs; longer time; Many organizations report the prospect of postponements or cancellations due to factors such as inflationary pressures and cost-of-living crises.
Rob Dobson, director of S&P Global Market Intelligence, said: “The decline in UK manufacturing continued at the end of the third quarter. The manufacturing sector is thought to be a drag on GDP. .
Manufacturers cut production once again as new orders fell for the fourth consecutive month. Factories report tough market conditions at home and abroad. Disappointingly, the exchange rate continues to depreciate even though exports are competitive.
“From the current cost of living crisis to the current financial market instability, The industrial sector is likely to remain volatile in the coming quarters as economic uncertainty grows and lending rates increase. deepening recessionary risks.”
In addition to the drop in orders, the manufacturing sector could also be hit by the severe labor shortages the UK is currently experiencing. The Confederation of British Industry’s (CBI) employment trends survey in August 2022, conducted by employment agency Pertemps Network Group.
Three-quarters of businesses in the survey said they are experiencing difficulties filling vacancies and labor shortages. Nearly half admitted they were unable to meet product needs as a result. More than a third of businesses affected by a thinner workforce also said they had to cut back or make changes to the products or services they offer.
To ease labor shortages, 46 percent of businesses surveyed called on the government to provide incentives to help invest in technology to boost productivity. 44 percent called for temporary visas to be issued for roles with significant shortages.
“It is clear that labor market disruptions are having an impact on the ability of companies to operate efficiently,” said Matthew Percival, CBI director of skills and inclusion. “Deficits need to be eased to create the conditions for higher investment for growth and to build a higher-wage economy.
“This means helping more British workers to overcome workplace barriers such as the lack of affordable childcare and taking a pragmatic approach to immigration.”
The findings come as business output fell to its lowest level in the February-September 2021 period, according to a separate report this week by accounting and business advisory firm BDO. This shows. BDO said companies are struggling to meet production demand as they battle labor shortages and rising inflation.
Not only has this increased the cost of materials, but it has also put pressure on many employers to raise wages for employees who are faced with a higher cost of living.
Jennifer Beckwith, CBI deputy director of employment policy, said: “One of the ways inflation affects households is by making it harder for employers to offer pay rises that keep pace with the costs people face.
“This is the highest proportion of businesses and most businesses since the question was first asked in 2018, with rising labor costs now threatening the competitiveness of the UK labor market.
“In the months ahead, government and business must set the UK on a path to higher productivity – the only sustainable way to achieve long-term wage growth.”
According to S&P Global, the US September saw the fastest new export business contract since May 2020, with reports of weak demand from the EU and China.
However, metersManufacturers maintained an overall positive outlook in September, with more than 49 percent expecting their production to be higher year-over-year. planned investments; New product launches and hopes for a more stable economic backdrop are likely to drive new contracts. .
Monday September 26 On Monday, The pound fell more than 4 percent to $1.03 in early Asian trade, hitting its lowest level against the dollar since the Decimal Decline in 1971, before recovering to around $1.07 earlier in the day.
Losing pounds is a direct result of exposure. The UK government’s economic plans revealed the biggest tax cuts in more than 50 years. The government later backtracked on some of these proposals. A lack of confidence in the country’s financial stability remains, exacerbating the impact of the cost-of-living crisis.
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