UK manufacturing companies’ profitability falls to two-year low

 
Clara Guibourg
Follow Clara
Manufacturing companies saw their profitability take a dive (Source: Getty)

Profitability of UK companies fell to 11.9 per cent in the first quarter of this year - slightly down from the previous quarter's 12.1 per cent, figures published today showed.

The Office for National Statistics said the drop had been driven down by rates of return for manufacturing companies, which slumped to 6.8 per cent, down from 11.4 per cent - their lowest since 2013. The ONS reckons this marks the steepest decline on record, caused by a sharp decline in operating surplus.

Meanwhile, things looked more encouraging for the services sector, where the net rate of return rose to 18.9 per cent, up from 18.5 per cent in the final quarter of 2014.

The figures will come as yet another blow to UK manufacturing, after figures released on Tuesday showed the industry experiencing a sharp slowdown. BCC director-general John Longworth commented:

The manufacturing sector has battled against structural problems for years but, even in that context, the scale of the slowdown being experienced by our manufacturers is a surprise and a concern.

Part of the reason might be down to the strength of sterling against the euro and the dollar. But currency fluctuations are not the only issues at stake.

Related articles