Markit/CIPS UK manufacturing PMI: Manufacturers face a pricing conundrum

Published at 11:26 AM on 02 February 2015

Commenting on the latest Markit/CIPS UK manufacturing PMI, Darren Jukes, manufacturing leader at PwC, said:

“The steep fall in input prices is good news for the manufacturers who have been able to benefit from the sharp drop in oil prices. However, as low oil prices continue, manufacturers will come under increasing pressure from customers to pass the savings onto them, particularly as current sentiment suggests that the low prices may be sustained for some time.

“If a manufacturer is operating in an environment where they can price flexibly depending on their operating and input costs, then they will have an opportunity to set competitive pricing while maintaining margin. However, for manufacturers who are in a less flexible pricing environment, the conundrum for them is what oil price they should assume for the duration of contracts. If they assume a sustained period of low oil prices and oil prices suddenly rise, they risk losing margin on their contracts.

“The tricky balancing act for manufacturers sitting down to set prices is to weigh up the risks of assuming a sustained period of low oil prices and passing on the resulting savings to customers compared with sitting tight which could see their customers opting for cheaper competitors. But sitting on the fence is no longer an option and those who get the balance right will be the big winners.”

Ends

Notes to editor

To speak to Darren Jukes or another of our manufacturing industry experts, please contact Hilary Downes on hilary.n.downes@uk.pwc.com or 07718 340113

About PwC

PwC helps organisations and individuals create the value they’re looking for. We’re a network of firms in 157 countries with more than 195,000 people who are committed to delivering quality in assurance, tax and advisory services. Find out more and tell us what matters to you by visiting us at www.pwc.com

PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details.


Hilary Downes
PwC | Manager - Communications
Office: +44 (0)20 7213 4706 | Mobile: +44 (0)7718 340 113
Email: hilary.n.downes@uk.pwc.com
PricewaterhouseCoopers LLP
1 Embankment Place, London WC2N 6RH


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About PwC

At PwC, our purpose is to build trust in society and solve important problems. We’re a network of firms in 157 countries with more than 208,000 people who are committed to delivering quality in assurance, advisory and tax services. Find out more and tell us what matters to you by visiting us at www.pwc.com.

PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details. © 2016 PwC. All rights reserved

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