![]() Supplier delivery time woes – a thing of the past?Īccording to the latest Suppliers Delivery Time Index, the last time manufacturers could access materials and components this quickly was around the 2008-2009 recession. This is now enabling manufacturers to start building back some of the margins that have been squeezed for such an extended period. IHS Markit’s PMI business survey suggests that following the rapid input price rises seen by manufacturers since the pandemic began, input cost inflation is still rising, but, importantly, much more slowly than it has been. But again, there are signs that some of these issues might just be abating. Squeezed margins have become common place and for many this has resulted in severe working capital constraints. The industry’s greatest concern in recent months, is steadily becoming less concerning.īeyond just energy, soaring input costs more generally have been a constant battle for business leaders within the manufacturing industry. The Government’s ‘Energy Bills Discount Scheme’ will also give businesses discounted energy rates until 1 April 2024. That said, the Office for Budget Responsibility’s latest Economic and Fiscal Outlook from March 23 forecasts energy prices to stabilise and fall further throughout 2023 and into 2024. Prices are still significantly higher than before the pandemic and before Russia’s invasion of Ukraine, and if the last twelve months has taught us anything, it’s that these prices can be volatile. However, since the start of 2023, UK energy prices have dropped quickly for both natural gas and electricity. Of course, for manufacturers, the impact of high energy costs is particularly profound given the levels of energy required for production. In January, our survey respondents identified higher energy costs as their single biggest risk. The results go some way to demonstrating why tentative positivity is growing, particularly within manufacturing. Our topical survey of more than 400 middle market business leaders, explored how prepared the middle market is for the upcoming tough economic conditions. ![]() Nonetheless, the outlook for the manufacturing sector does not look as bleak as it did mid-winter. Significant growth for the UK economy remains a distant hope for many economists, including our own. ![]() It may be cliché to use phrases like ‘green shoots of recovery’ to illustrate the tentative optimism building within the manufacturing sector this spring.
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