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Contract Manufacturing Index sees significant growth in first quarter of 2021

Posted on 12 Apr 2021 and read 312 times
Contract Manufacturing Index sees significant growth in first quarter of 2021The just-published Qimtek Contract Manufacturing Index for the first quarter of 2021 has seen marked growth in comparison to the previous quarter overall, although there is a mixed picture as there has been some disparity among the individual indexes themselves.

Reporting a 25% increase against the final quarter of 2020, the latest Contract Manufacturing Index depicts a strong start to the year with substantial outsourcing activity during January and February, which ran out of steam resulting in a slower period during March as the quarter came to a close.

In addition, the average order value reached record levels during the first quarter, hinting at an uptake of work awarded, with less speculative enquiries than in previous quarters.

Although the ‘Fabrication Index’ reported an overwhelmingly positive trajectory, with growth of 132% in comparison to the preceding quarter, the ‘Machining’ and ‘Others’ indexes failed to exceed their respective outsourcing levels from the final quarter of 2020.

Both of these indexes reported a decline against the previous quarter, which means that the growth of the Contract Manufacturing Index as a whole can be attributed to an uptake in sub-contract fabrication work. In addition, the latest Contract Manufacturing Index shrank by 25% in comparison to the first quarter of 2020, due to the ongoing effects of the Covid-19 pandemic.

While the first quarter of any year is a traditionally buoyant period for the UK's sub-contract manufacturing industry, 2021’s efforts were slightly hampered by a third national lockdown, as well as the finalisation of Brexit.

However, the increased average order value could indicate that the industry is stabilising as the political ramifications become clearer, meaning that there is less hesitation to commit to business decisions.

As the UK now emerges from its third lockdown, it is expected that the second quarter of 2021 will see an increase in sub-contract manufacturing activity, especially when factoring in the recent reshoring efforts as a result of Brexit and Covid-19.