According to a new report, UK manufacturing has made a much stronger start to the year than expected, providing a much-needed boost to confidence, recruitment and investment.
The latest quarterly Manufacturing Outlook from the EEF (
www.eef.org.uk) (the manufacturers’ organisation) and accountancy and business-advice firm BDO (
www.bdo.co.uk) reports ‘positives’ across all the sector’s key indicators. The balance of firms reporting an uplift in output (31%) and orders (29%) is double what was expected.
Meanwhile, a balance of 54% of manufacturers reports positive demand conditions in Europe, while only 20% say they are yet to see any pick-up in overseas markets. Business confidence is now at a level last seen in 2015.
Coupled with the fact that firms are much busier and enjoying higher demand than they had expected, this is supporting an increase in employment and investment intentions, as firms strive to meet capacity requirements.
With the positive trend expected set to continue in the second quarter of 2017, the EEF has revised its growth forecasts upwards to 1.0% for manufacturing and 1.8% for overall GDP.
EEF chief economist Lee Hopley says: “The post-EU-referendum wobble that defined UK manufacturing’s performance in the second half of 2016 has been left behind, with manufacturers now rallying far more strongly than even they had predicted.
“The sharp rebound in exports has been instrumental in helping firms regain ground, and with investment, employment and confidence all on the up, the picture now is of a sector not quite in peak health, but certainly making a positive contribution to UK growth this year.”
Tom Lawton at BDO says: “The UK manufacturing sector again proves to be remarkably resilient, with its first-quarter performance exceeding expectations and providing a much-needed boost for the economy.
“Increases in demand and confidence are providing the right environment for manufacturers to invest, and it is promising to see investment indicators in positive territory over the last two quarters.”