Business News Round Up (24/11/2023)
Manufacturing sector improves but UK economy not out of the woods yet
The latest set of economic data from the UK has come in strong for November indicating that there may be hope for the British economy after all.The flash estimate for the UK S&P Global/CIPS Manufacturing purchasing managers’ index (PMI) for November clocked in at 46.7. This was a step up from October’s 44.8, as well as analyst estimates of 45. Although output was still contracting, it was at the slowest rate in five months. However, employment levels and new orders kept falling as the UK economy continues to struggle with weak demand. Growth projections also saw their lowest since last December. The manufacturing PMI measures a weighted average of five indicators, namely suppliers’ delivery times (15%), new orders (30%), employment (20%), output (25%) and stocks of purchases (10%).
£1m investment in regional skills hubs to benefit Scottish clusters
The Engineering Construction Industry Training Board (ECITB) has announced it will invest one million pounds for Regional Skills Hubs over the next two years to boost training provider capacity and grow new entrant numbers in the ‘Industrial Cluster’ hot spots that are at the heart of the UK’s decarbonisation agenda. Andrew Hockey, ECITB Chief Executive, said: “We know that over the next few years, the UK will need in excess of 25,000 extra workers for major engineering construction projects, including those that contribute to the country’s net zero goals. In addition to building new renewable and nuclear energy capacity, we must also ensure that our existing industries undergo substantive decarbonisation. This will need many more skilled workers. This investment will address the skills shortages by supporting training and assessment capacity-building projects in the UK’s industrial heartlands that will directly increase the flow of workers into the industry.”
UK business activity grows marginally in November
UK business activity grew marginally in November, easing fears of the economy contracting in the last three months of the year. The S&P Global/Cips flash UK PMI composite output index, a measure of the health of the manufacturing and services sectors, rose to 50.1, from 48.7 in October, indicating a majority of businesses reported an expansion in output, the first since July. The results were ahead of expectations, with economists polled by Reuters forecasting the index would remain unchanged at 48. Although not seen as an accurate predictor of gross domestic product growth, the PMI indices are closely watched because they provide a near real-time indicator of the health of the private sector, compared with official data, which is published with a lag of several months.
https://www.ft.com/content/eff82cbe-f5a1-4ec4-94c4-8bb5916dfdf2
Labour shortage is holding back economic growth, says think tank
A labour shortage is holding back economic growth and contributing to inflation, according to an economic think tank. Paul Dales, Chief UK Economist at Capital Economics, an independent economic research business based in London, said these effects could keep wages high and stall interest rates for longer. The UK had net inward migration of 672,000 in the year to June 2023, mostly from non-EU countries and for work reasons, above estimates for the year ending December 2022. However, Dales said this did not increase the labour supply significantly, adding that this could indicate skill mismatches or people leaving the workforce. “The UK’s shortage of labour since the pandemic has held down economic growth and boosted inflation,” he said. “At the moment the supply of labour appears to fall short of the demand for labour.”