The UK manufacturing sector was 6.6% more productive in the third quarter of 2023 than the same period in 2022, driven primarily by improvements in the automotive and broader transport equipment sector, according to analysis of ONS data from FourJaw Manufacturing Analytics, a technology company that measures machine productivity.

FourJaw’s analysis, which informs its UK Manufacturing Productivity Index, shows that this productivity boost was worth £9.4 billion to UK manufacturers and continued a run of improved manufacturing output and productivity going back to 2021. The total value of UK manufacturing output in the third quarter of 2023 was £152.4 billion. Although this was £9.3 billion more than the same period in 2022, it was £2.9 billion lower than Q2 2023 — the first quarter-on-quarter reduction in manufacturing output since the start of 2021.

Year-on-year improvements in output and productivity were achieved despite the number of active UK manufacturers falling from 138,000 to 136,000 in the same period. Output per manufacturer increased by 8% between Q3 2022 and Q3 2023, while productivity per manufacturer was up 8.2%. On average, each active UK manufacturer produced goods worth £1.12 million in Q3 2023, up from £1.04 million the year before. The motor vehicles and transport equipment sector achieved the most significant year-on-year improvements. Output in Q3 2023 was £5.3 billion higher than in Q3 2022, supported by a 19.7% increase in productivity worth £5.1 billion across the sector.

A position of strength
Meanwhile, the food production and electronics (computer, electronic and electrical products) sectors also significantly improved output and productivity. Food production achieved a 6.2% productivity gain year-on-year worth £1.4 billion, while electronics delivered a 9.8% productivity improvement worth £1 billion to the sector in Q3 2023.

Chris Iveson, CEO at FourJaw Manufacturing Analytics, said: “Manufacturers face significant challenges and uncertainties right now. However, many do so from a position of strength, having delivered improvements in output and productivity over the last two years. The value of UK manufacturing output has soared post-pandemic. Some of this is inflation, which reached almost 20% for goods leaving factories last year. Once we adjust for that, we see manufacturers achieving incredible productivity improvements in 2022 and 2023.

“Order books have been growing from domestic and international markets, and we have seen manufacturers reshore work that was outsourced overseas. That has filled previously underused production lines, led to investment in new machines and factory expansion, and driven greater use of smart technologies to find additional capacity within existing production lines.

“There are many reasons to be cheerful. Automotive has rebounded well after addressing supply-chain issues, and aerospace companies are enjoying their largest order books ever. Despite this, manufacturers are understandably cautious and looking for ways to boost agility and productivity without investing in additional assets.”