In this article, Stephen Cooper, head of manufacturing at KPMG UK, comments on the recent CIPS/Markit manufacturing data recently published. "The UK manufacturing sector continues to show that is is on a recovery path, and growing. This, along with a marked easing of central bank lending conditions to businesses, and the general improvement in the wider UK economy as a whole, is good for manufacturers. This is shown in growth in new domestic orders. We do, however, need to watch UK deflation and is impact on costs and sale prices as this may impact UK domestic demand, if not managed carefully. While UK domestic orders are growing, this is not reflected in UK exports. This is likely linked to the relative uncertainty in the rest of Europe, as Europe still accounts for some 40% of UK exports. The continuing debt repayment issues in Greece, which are still to be fully resolved with the Eurozone in the medium term, will have created some level of unsettlement in Europe. The Eurozone as a whole is showing mixed signs of recovery, with France and Austria seeing a fall in employment, while Ireland, Spain, Italy, Germany and the Netherlands are showing some improvement i manufacturing performance. On the wider global front, while China is seeing some upturn in manufacturing output, the growth in external demand is weak, which is not a good sign. The USA on the other hand, is showing strong growth. As a large world player, the USA upturn will likely have a positive spin off for the UK."
