Making a bad start to 2018
Manufacturers report weaker growth
OIL giants BP will take a £1.1billion profit hit due to president Donald Trump’s move to slash US corporation tax. Although they will get a long-term benefit from the policy – which sees Federal corporation tax slashed from 35 per cent to 21 per cent – BP said they will have to take a one-off charge related to deferred tax. Rivals Shell have already indicated that they will suffer a £1.5billion hit. THE Government’s hopes of a 2018 economic revival suffered a blow yesterday as the year’s first data revealed a slowdown for UK manufacturing.
The latest IHS Markit/CIPS UK Manufacturing purchasing managers’ index showed a reading of 56.3 in December, down from 58.2 in November, as manufacturers recorded weaker growth in output, new orders and employment.
The below-forecast levels compared badly with Eurozone figures, which hit a 17-year high last month – however, IHS Markit said the UK figures were “solid”.
Rob Dobson, director at Markit, said: “Although growth of output and new orders particularly in the consumer goods sector moderated during December, rates of expansion remained comfortably above longterm trend rates. “The outlook is also reasonably bright, with more than 50 per cent of companies expecting production to be higher one year from now.” Samuel Tombs, the chief UK economist at Pantheon Macroeconomics, was less positive, suggesting the figures showed manufacturers would continue to struggle this year. He said: “UK manufacturers have cut investment since the Brexit vote and are struggling to find skilled workers. As a result, backlogs are increasing quickly and supply chain delays are worsening. “These constraints will only worsen unless manufacturers suddenly ramp up investment.” Other analysts suggested that the CARE Mark Carney strengthening of sterling could hit manufacturer performance and impact Bank of England thinking on the direction of interest rates.
Russ Mould of AJ Bell said: “A slight decline in UK manufacturing activity shows how even the modest gains made by the pound in late 2017 could provide a headwind to companies and their exports.
“While the Bank of England may be happy to see the pound rise on the inflation front, governor Mark Carney will doubtless tread carefully when it comes to further interest rate rises in 2018, given how a weak pound has helped to support manufacturing over the past 18 months.” FINDING skilled workers is the main headache for UK businesses heading into 2018. A survey from business group the ICAEW found the availability of skilled workers is a continuing challenge for 44 per cent of firms – up from 39 per cent last year.
More than a third of businesses said immigration policy on EU migrants could also impact their performance. Matthew Rideout, ICAEW director, said: “We are facing the same challenges in 2018 as we did in 2017. Businesses should look beyond Europe and invest in technology, training and development.” MARKS & Spencer have continued their international retreat by selling up in Hong Kong and Macau for an undisclosed sum.
M&S said 27 stores have gone to their Dubai partners Al-Futtaim who will now be their sole franchisee in Chinese territories, as well as up to 11 other countries in Asia and the Middle East.
Paul Friston, M&S’s international director, said: “We have reshaped our international business which has improved profitability and positioned us for growth.”
The chain are focusing on their UK business.