Britain’s manufacturing and construction industries both appear to ending the year on unexpected highs, according to recent reports.

Construction and manufacturing growth well above predictions

The Markit/CIPS purchasing managers’ index (PMI) for construction recorded a much better than predicted reading of 53.1 in November, up from 50.8 the previous month and well above analysts’ forecasts of 51 in an index where a reading above 50 indicates growth.Meanwhile, the manufacturers’ organisation EEF said the sector was ending the year “with a bang” as factories enjoyed their best month in more than four years in November. The IHS Markit/CIPS manufacturing PMI surged to 58.2 last month, up from an upwardly revised 56.6 in October and representing its highest level since August 2013.

Demand for exports offsets weakening UK orders

A survey of almost 350 UK manufacturers by EEF and business advisory firm BDO found that demand for exports, particularly from European markets, was offsetting weakening domestic orders.Lee Hopley, the EEF’s chief economist, said, “Stronger global growth has cemented the foundations for growth in manufacturing this year, but the sector’s contribution to the UK economy has been greater than most expected.“Not only have we seen consistently positive survey responses in each quarter this year, but growth has been evident across all industry segments and UK regions in 2017.“There is some confidence that this momentum will carry into 2018, but as we head towards the Brexit end game we need manufacturing to produce the same trick of broad-based growth again next year.”

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House-building primary driver of growth

In the construction sector, activity increased at its strongest rate since June, with new orders and employment numbers both rising. However, IHS Markit said that, while house-building remained the main driver of growth, commercial building and civil engineering both showed signs of contraction.“Construction firms reported that heightened economic and political uncertainty continued to hold back commercial development activity,” said Tim Moore, associate director at IHS Markit.“The latest drop in civil engineering was linked to a recent lack of tender opportunities for infrastructure-related projects. Business optimism across the construction sector remained relatively subdued, but picked up from the near five-year low seen in October.”

Help to buy aimed at maintaining momentum

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, commented, “Looking ahead, continued support from relatively low mortgage rates, the Help to Buy Scheme and other housing policy initiatives should ensure that housing maintains momentum.“Meanwhile, signs that the Brexit divorce terms will be agreed imminently, enabling future relationship talks to begin, might help corporate confidence to recover. But with the UK government insisting – for now – that Britain eventually will leave the EU’s single market and customs union, firms likely will remain reluctant to commit to construction projects with long time horizons. We expect the construction sector to bump along the bottom as long as a hard Brexit still is one of the options on the table.”Read more about current issues facing industry in the UK in the Winter issue of our magazine, coming soon.For related news and features, visit our Enterprise section. Look out for the launch of 2018's Relocate Awards, entry open in January.Relocate’s new Global Mobility Toolkit provides free information, practical advice and support for HR, global mobility managers and global teams operating overseas.Access hundreds of global services and suppliers in our Online Directory

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