Manufacturing falls at its fastest pace for three years

Graham_Devon

It's really getting rather dire out there at the moment.

The UK's manufacturing sector shrank at its fastest rate for more than three years in July, according to a closely watched survey.

With any number below 50 indicating contraction, the Markit/CIPS manufacturing purchasing managers' index fell to 45.4 last month, from a downwardly revised 48.4 in June.

July's reading was the lowest from the index since May 2009.

The EEF trade organisation said more had to be done to boost the economy.

The survey also highlighted a big fall in export orders for manufacturers, which it said had fallen at the sharpest rate since February 2009.

http://www.bbc.co.uk/news/business-19074716

It's suggested the government do more, but I really fail to see what can now be done, on top of what's already been done. You can't make people buy stuff....therefore you can't make companies require stuff...

The problem at the moment is simple, the majority simply have too much debt and high costs of living to service. It was always going to be.

wotsthat

Graham_Devon wrote: »

The problem at the moment is simple, the majority simply have too much debt and high costs of living to service. It was always going to be.

Is that an opinion or is there some data to back that up?

Clearly, it's not as simple as you think (it never is). Won't a great number of people be limiting the amount of manufactured goods they purchase because of the economic uncertainty? i.e. not because they are saddled with debt but because they are being prudent and choosing to defer or cancel spending plans.

Graham_Devon

wotsthat wrote: »

Is that an opinion or is there some data to back that up?

No, theres somehting to back it up. The article, and all other articles like it.

The_White_Horse

as i have said all along - the Govt need to assist people reduce their debts - by forcing all lenders to accept 0.5% on mortages for all, 1% on loans for all and 2% on credit cards.

the lenders get their money back (plus a little more) and the public have more money in their pocket to spend - to revive the economy.

Graham_Devon

wotsthat wrote: »

Clearly, it's not as simple as you think (it never is). Won't a great number of people be limiting the amount of manufactured goods they purchase because of the economic uncertainty? i.e. not because they are saddled with debt but because they are being prudent and choosing to defer or cancel spending plans.

Is that opinion, or is there some data to back that up?

Let's put it this way. I think my suggestion is just a little more realistic.

wotsthat

Graham_Devon wrote: »

Is that opinion, or is there some data to back that up?

Let's put it this way. I think my suggestion is just a little more realistic.

It must be nice living life in black and white.

Have you ever thought that the level of consumer debt in the UK is but one factor influencing UK manufacturing data?

Graham_Devon

wotsthat wrote: »

It must be nice living life in black and white.

Have you ever thought that the level of consumer debt in the UK is but one factor influencing UK manufacturing data?

This is getting a little tedious.

Yes, I said "the problem at the moment". That does not mean I don't think there are other factors, and it's solely one simple problem. It's just a matter of speech.

"The main problem at the moment".....would that suffice? or do I have to list all problems?

Pennywise

Graham_Devon wrote: »

The problem at the moment is simple, the majority simply have too much debt and high costs of living to service. It was always going to be.

That's not what I'm seeing. I'm seeing clients, family and friends sitting on cash and worrying about the future so keeping hold of it and not spending it. I know very few people who are deep in debt.

One example is a business client who have a fleet of four vans. They have historically (last 20 years) bought a new van every year to keep their fleet modern. Despite no downturn in profits or cash flow, they havn't bought a new van since 2008, so their fleet is now between 4-8 years old rather than 1-4 years old. They can afford new vans - the money's there in the bank waiting to be spent. They're simply sitting on it "just in case" the business takes a dive, so they've effectively built up their war chest as a contingency.

Personally, I've done the same. I've now got more money sat in my bank accounts than ever before. Yet I am spending less by simply cutting out the wasteful and unnecessary spending and shopping around more for the essentials. My income hasn't fallen.

People in debt or otherwise struggling are only part of the big picture. There's been a collapse in consumer confidence which has meant that people are saving rather than spending. Until there is confidence about the future, people aren't going to splash their cash. We can't concentrate only on those in debt because they form only a minority. We need to concentrate more on building confidence for the majority who need to start spending again to restore the economy.

Thrugelmir

Graham_Devon wrote: »

It's suggested the government do more, but I really fail to see what can now be done, on top of what's already been done. You can't make people buy stuff....therefore you can't make companies require stuff...

Manufacturing includes North sea oil and gas output. Given its past its peak and in decline. Then for "manufacturing" to stand still in output terms will be an achievement.

Given that European car manufacturers are struggling. The growth and continued investment in UK production does bode well for the future.

fc123

Pennywise wrote: »

That's not what I'm seeing. I'm seeing clients, family and friends sitting on cash and worrying about the future so keeping hold of it and not spending it. I know very few people who are deep in debt.

One example is a business client who have a fleet of four vans. They have historically (last 20 years) bought a new van every year to keep their fleet modern. Despite no downturn in profits or cash flow, they havn't bought a new van since 2008, so their fleet is now between 4-8 years old rather than 1-4 years old. They can afford new vans - the money's there in the bank waiting to be spent. They're simply sitting on it "just in case" the business takes a dive, so they've effectively built up their war chest as a contingency.

Personally, I've done the same. I've now got more money sat in my bank accounts than ever before. Yet I am spending less by simply cutting out the wasteful and unnecessary spending and shopping around more for the essentials. My income hasn't fallen.

People in debt or otherwise struggling are only part of the big picture. There's been a collapse in consumer confidence which has meant that people are saving rather than spending. Until there is confidence about the future, people aren't going to splash their cash. We can't concentrate only on those in debt because they form only a minority. We need to concentrate more on building confidence for the majority who need to start spending again to restore the economy.

fabulous post and echos how we feel as we have had a great 3 years and this one has meant we have some reserve...but I am uber cautious.....and we manufacture here in the UK and some overseas. A lot of our sales are export too incl the Middle East.

We also really could do with a about 60 hours of extra staff labour per week at the moment (and have done for some time) but we just won't take the risk of employing anyone, even short term....just in case sales collapse all of a sudden for whatever reason.
Then our reserve is wiped out by unsold stock and wage bills for staff without enough to do....as it takes a while to kick in and one tends to wait a bit before you have to lay someone off...(which I hate doing anyway).

I know a lot of UK clothing manufacturers have had a dire summer just due to the poor weather so no quick UK repeats for the chain stores of a fast selling summer line. I also have heard tales of vast quantities of unsold stock sitting in containers that can't even be cleared as there is so much clearance floating around.

Loughton_Monkey

I get increasingly tired of [what I believe is] over-analysis of relatively minor indicators. We are in the middle of a financial crisis, and does any of us expect any different from bad news?

Most economies have gorged themselves on 'false' growth boosted mainly by unrealistic debt, and sleight-of-hand by bankers etc. and now it's pay-back time.

Growth is overplayed. Companies that drive turnover and nothing else will fail if it is not profitable. Similarly, countries that drive GDP and nothing else will also fail if the growth comes simply from faster circulation due to more debt.

And why get upset about manufacturing specifically? Do we really think we can compete fully with Asia on price and quality? What's wrong with Agriculture, Science, technology, research, Financial Services, Design, Engineering.....

There are causes of huge reccessions like this one. There are also an awful lot of symptoms. Measuring and whinging about the symptoms is (very sadly) human nature, but only by treating the cause will the symptoms go away. Let's face it, it is difficult enough to deal with the cause, but it's the only way.