Pent-up demand drives regional manufacturing upsurge
According to the Make UK/BDO Q3 Manufacturing Outlook survey, output and orders in the third quarter came in very strongly at a balance of +24 per cent and +14 per cent, respectively, while investment intentions jumped sharply to a balance of +33 per cent - indicating that pent up demand has been switched on.
This more positive picture has also translated into recruitment intentions which also rose sharply to a balance of +19 per cent. The results have also shown the United States has recovered its position as the second most favoured market for growth prospects, having dropped out of the top three global blocs in the previous quarter for the first time in the history of the survey.
However, the survey also shows that almost three quarters of companies expect further increases in business tax in the forthcoming Budget at a time when a similar number have said their costs have already increased more than expected in the last six months.
As a result, almost three fifths of companies have already raised prices this year, while over half intend to do so in the next six months – highlighting the ongoing inflationary pressures for manufacturers. Looking forward, growth forecasts for the sector remain weak with output still forecast to fall by -0.1 per cent this year and -0.6 per cent in 2026.
Chris Corkan, Region Director of Make UK in the East of England, said: “After a period of considerable uncertainty in global markets, these figures are an encouraging sign that East of England manufacturers’ confidence is improving and, more importantly, being translated into growth and investment.
“However, one swallow doesn’t make a summer, and with UK and European markets in particular remaining anaemic it wouldn’t take much to knock prospects for further growth.”
Peter Harrup, Head of Manufacturing at BDO in the East of England added: “These latest findings offer a glimmer of hope for the sector in the East of England. Despite what has been a relentless year by all accounts, manufacturers have somehow boosted their output and doubled down on their investments to match.
“However, growth forecasts remain weak and the spectre of the upcoming Budget is looming. Manufacturers across the region now need robust signalling from the Government that their investments are worth the risk.”