At a glance
- Optimism abounds as results of Zurich-sponsored survey are revealed
- Manufacturing sector remarkably resilient, with encouraging signs for coming months
- However, in a separate poll, Zurich finds that manufacturers are concerned over a number of emerging risks, notably adverse weather and supply chain vulnerability
The expansion of the UK’s manufacturing sector seems set to continue as it shrugged off winter’s deluges to post its twelfth consecutive month of positive growth.
April’s Markit/CIPS UK Manufacturing PMI report, a bellwether of the UK’s manufacturing sector, allied to an improving UK domestic economy, painted a reasonably rosy picture for manufacturers.
And this optimistic outlook of UK manufacturers was supported by the results of a Zurich-sponsored UK manufacturers survey in the latest Annual Manufacturing Report, in which 94% of respondents reported that they are ‘quite’ or ‘very’ optimistic. It is the highest figure since the survey began in 2008. For the first time ever, no respondents were ‘very’ pessimistic.
This optimism reflects a wider sense of confidence in the economy driven by Bank of England’s revised 2014 growth figures from 2.8% to 3.4%, improving GDP and employment. Production and, in particular, manufacturing appear to have turned the corner with two consecutive quarters of 0.8% growth and a fourth quarter performance of 0.9% growth.
Commenting on the findings in the Annual Manufacturing Report, Sophie Spink, Head of Government and Industry Affairs for Zurich’s UK General Insurance business, said: “The overall sense of optimism is reflected in an improved view of the government’s handling of the economy and UK manufacturing, although our respondents consistently rate the government’s handling of UK manufacturing below that of the country as a whole.”
Further backing up the generally positive outlook, the latest Office for National Statistics manufacturing industry output data figures, showed growth of 1.8% in January and new orders in the last quarter of 2013 up 1.5%.
Separately, manufacturers, despite their growing confidence, revealed some reasons for caution through fears that some emerging risks are likely to present major challenges in the future, at a recent event held for manufacturers by Zurich.
The overall sense of optimism is reflected in an improved view of the government’s handling of the economy and UK manufacturing, although our respondents consistently rate the government’s handling of UK manufacturing below that of the country as a whole
Sophie Spink, Head of Government and Industry Affairs at Zurich
Nearly a third of manufacturers quizzed by Zurich thought adverse weather patterns would cause problems for their business in the future, while a similar number believed vulnerabilities in the supply chain would be a major threat to their business. Interestingly, though, only 5% of manufacturers thought a cyber attack would likely cause any future disruption to their business.
Zurich remains one step ahead of the game in terms of both insurance and risk management solutions regarding these emerging trends and brokers can use the insurer’s knowledge and expertise to advise their manufacturing customers to take the appropriate steps and mitigate the full extent of the risks they might face.