Following the release of the latest UK Manufacturing PMI today (1 December), Ginni Cooper, Partner at MHA, believes manufacturers are facing battles on multiple fronts as we enter the busy winter months, with enduring supply chain issues the biggest threat to sector output:

“Demand for products remains high in the UK, however persistent supply chain issues are continuing to hamper manufacturers’ ability to meet market expectations, an issue that seems unlikely to improve before the end of the year. This has been exacerbated by production problems due to rising Covid-19 cases in other countries, causing greater lead times for UK manufacturers as they enter one of the busiest periods of the year.

“Alongside the never-ending supply chain crisis, manufacturers continue to face shortages of materials and skills. The availability of key materials such as timber, steel and electrical components, to name but a few, have fluctuated since the beginning of the year and, as a result, prices have increased at a rapid rate with no signs of abating. In a landscape of rising energy prices, particularly as we head into winter, business owners in the sector have little choice but to pass price increases onto their customers.

“Employment rates for the manufacturing sector are growing to keep up with high demand. However, the ongoing shortage of highly-skilled staff has driven up wage costs to unsustainable rates. The UK government’s recently announced increase in employers national insurance contributions (NIC) for the 2022-23 tax year will only further exacerbate the issue for employers and require them to make extra budgetary provisions in the crucial months ahead.”