A recent Q4 Manufacturing Outlook survey by Make UK and BDO has revealed that British manufacturers witnessed a significant upswing in output, surpassing order growth three times in the last quarter. This unusual trend, last seen during the stockpiling phase in anticipation of a potential ‘no-deal’ scenario in 2019, underscores a positive shift in the sector.
The survey indicates a noteworthy shift, with export orders surpassing domestic orders for the first time in four years. This suggests that companies are exploring opportunities in new or faster-growing markets beyond the constraints of the UK economy.
While recruitment intentions have rebounded strongly after a previous quarter blip, capital investment plans have slightly weakened, although they remain at reasonable levels historically.
Fhaheen Khan, Senior Economist at Make UK, remarked on the returning stability for manufacturers after recent economic and political shocks. The Autumn Statement’s positive announcements provide manufacturers with a more predictable planning environment, allowing them to strategize without constant disruptions.
Richard Austin, Head of Manufacturing at BDO, highlighted that manufacturers had been urging the government for targeted support to stimulate growth and investment, and the Autumn Statement seemed to make some headway in this direction. With a relatively stable year-end, there is hope that the sector can drive growth moving forward.
Key findings from the survey include an increase in the output balance to +20% in Q4 from +3% in Q3, an unexpected surge that is likely linked to re-stocking or stockpiling. Export orders rose to +10%, marking a shift from a negative balance in Q3. Recruitment plans also increased, with intentions expected to rise further in Q1 2024.
Despite a weaker investment intention at +10%, the trend remains positive, aligning with the overall stability observed in the manufacturing sector.
Make UK and BDO have adjusted their forecasts for manufacturing growth in 2023 from -0.5% to +0.8%. However, growth in 2024 is expected to be modest at 0.1%, reflecting the evolving economic landscape. Overall GDP forecasts indicate a growth of 0.6% in 2023 and 0.4% in 2024.
The survey, conducted between October 25 and November 29, involved 303 companies, providing a comprehensive overview of the current state of the manufacturing sector in the UK.