Manufacturing has always been the nation’s saving grace, with the pound’s weakness – courtesy of prime minister Theresa May’s failure to secure a majority win at the general election – serving UK products on a cheaper platter for overseas buyers. This market, our June 2017 economic statistics found, helped set those economic doom-sayers straight.
Fast-forward to the recent IHS Markit/CIPS UK Manufacturing PMI and you’ll see manufacturing has been going strong for ten months – after a momentary hiccup right after the referendum vote. But despite popular thought, as was aptly put by IHS senior economist Rob Dobson, foreign demand didn’t give the manufacturing sector its “against all odds” boost, though it did help.
“The ongoing strength of the domestic market remains the main driver of the economy’s upturn,” he explained. “Growth of new export business played a lesser role in comparison, with the trend in foreign demand continuing to improve only in fits and starts, despite the assistance of a historically weak sterling exchange rate.”
This may in some part be related to Britain’s global reputation taking a hit following its vote to leave the EU, highlighted by Reputation Institute’s Country RepTrak report. After interviewing over 39,000 G8 citizens, Canada came out as the world’s most reputed country. The UK didn’t even make it to the top ten, pushed into a much lower ranking by Switzerland, Australia, Finland and the Netherlands to name a few.
James Bickford, managing director of Reputation Institute, maintained the UK’s 18th position was the result of “significant drops in people’s propensity to invest, work and buy from the UK. These all have a direct impact on tourism, exports and foreign investment.
“A one point increase in the overall Index of a country in a particular market has an average impact of a 3.1 per cent increase in tourist arrivals from that market and 1.7 per cent increase in exports to that market. That the UK has seen such a shift in perceptions world-wide could spell trouble for the country’s prospects once the Brexit process is finalised.”
Arguably of more concern, however, are the issues unfolding within the UK’s borders, unveiled in our June 2017 economic statistics roundup. For example, the Recruitment and Employment Confederation (REC) suggested bosses are struggling to fill vacancies, with EU workers being put off by the Brexit result.
“Demand for staff is growing within all sectors and all regions of the UK, but there are fewer and fewer people available to fill specific roles,” Kevin Green, CEO of REC, said.
“We have the lowest unemployment rate since 2005 and people already in work are becoming hesitant about moving jobs amid Brexit uncertainty. Meanwhile, the weakening pound and lack of clarity about future immigration rules is putting off some EU nationals from taking up roles in the UK.”
This was echoed by Mariano Mamertino, EMEA economist at Indeed, in our June 2017 economic statistics report, maintaining: “Each successive fall in unemployment is looking like an ever more hollow victory. However, the greatest concern over the labour market has shifted from those who are out of work to those who are in work, and how their living standards are being steadily squeezed.”
Indeed, consumer prices have risen by 2.9 per cent in the past 12 months, while average wage growth slowed to 1.7 per cent a year – and the mismatch has fuelled concerns for a crisis in living standards. Frances O’Grady, general secretary of the TUC, warned that “real wages have fallen for the second month in a row.
“Ministers must focus on delivering better-paid jobs across the UK. And it’s time to bin the artificial pay restrictions on nurses, midwives and other public sector workers. Britain needs a pay rise, not more pressure on household budgets.”
There is one hope though, Mamertino stressed in our June 2017 economic statistics roundup. As the number of “hard to fill” roles increases, employers will increase the salaries they offer new recruits.
“This tightening of the labour market will nudge up average wages in some areas,” he said, “but there is a long way to go to ease the pain of Britain’s worsening squeeze on living standards.”