The IHS Markit/CIPS Manufacturing Purchasing Managers’ Index (PMI) reached 65.6 last month, up from 60.9 in April which, at the time, was already the highest level recorded since the survey first appeared back in 1992. Given that any reading above 50 indicates growth, that is quite an achievement after the stop/start roller coaster ride that UK industry has endured these past 18 months.
The fact is we now have solid proof that the UK is recovering from the pandemic and Brexit faster than any of the leading economists expected. So fast, in fact, that some suppliers are struggling to keep up with demand due to transport delays and shortages of certain materials.
It’s not just the UK that is bouncing back. Production levels in the US have risen to unprecedented levels; the ISM measure of production activity rose from 60.7 in April to 61.2 last month. Oil prices have recovered – Brent crude to $70 a barrel – and demand for precious metals, particularly those used in electric car batteries and solar panels, has soared. Experts are now predicting that growth in America’s GDP could hit double figures by the end of this year. This bodes well for everyone else, including Britain, so it is hardly surprising that world stock markets are booming on this wave of optimism.
Predictably, economists have now switched their attention to warning about inflationary pressures and the prospect of a rise in interest rates. Interest rates are beyond our control, they will impact us later. Right now, the immediate problem is how to fill the skills gap in the employment market. According to a survey by accountants KPMG, the easing of COVID restrictions and reopening of various sectors meant that demand for workers rose at its fastest rate in May for over 23 years.
Whilst much of the demand is coming from the hospitality industry, we are learning that there is also an acute shortage of skilled workers in computing and IT. Investing in technology to make ourselves more efficient, productive and competitive is one thing – we need skilled staff to optimise the benefits. That means training new recruits and retraining existing members of staff, plus investing in future generations through apprenticeships and graduate trainee schemes. Improved Government incentives are already in place to help make this happen – but more needs to be done.
Advanced and emerging economies will be doing more – we cannot allow ourselves to fall behind in our moment of triumph.