Output slows as costs catch up with manufacturers

The May figure shows a one month fall of a hefty 0.5 per cent with the machinery and equipment industries – down 1.5 per cent – bearing the brunt of a widespread fall back. However, the less volatile three month output data showed a more shallow fall of 0.2 per cent compared with the previous three months. Here, the significant decrease was a fall in output of 3.5 per cent in the so-called ‘other’ category of manufacturing industries. Commenting on the figures, Ray O’Donoghue, head of UK manufacturing at Barclays Commercial Bank, said the sector was now 0.1 per cent lower than the same period last year, confirming opinions in recent surveys from the CBI and the Chartered Institute of Purchasing and Supply. “Manufacturers along with other sectors of the economy are clearly feeling the pressure,” he went on. “This is due primarily to continuing increases in the costs of raw materials and energy. The efforts to pass these costs on are likely to feed through into consumer prices. Some relief is being provided by export markets where manufacturers are taking advantage of sterling’s weakness to protect or grow sales.” Successful manufacturers, O’Donaghue added, would be those who could continue to protect their margins and also take advantage of new market opportunities such as green technology initiatives.