In the midst of a challenging economic landscape, the latest Q1 Manufacturing Outlook survey published by Make UK and business advisory firm BDO indicates that confidence levels among manufacturers remain strong. Despite a subdued outlook for the UK economy overall, the survey highlights notable disparities across sectors and regions.
According to the survey findings, sectors such as electronics, aerospace, and food and drink are experiencing significant growth, while certain regions, notably the South East and Wales, are outperforming others. However, these imbalances are becoming increasingly entrenched, raising concerns about the effectiveness of government policies aimed at addressing regional economic disparities.
Fhaheen Khan, senior economist at Make UK, underscored the need for a long-term industrial strategy to address fundamental challenges facing the manufacturing sector. Khan emphasized that while manufacturers maintain confidence in their own prospects, the broader economic outlook remains weak, necessitating urgent action from policymakers.
Richard Austin, head of manufacturing at BDO, echoed similar sentiments, emphasizing the importance of long-term government support to sustain manufacturing growth. Austin warned that the persistence of regional disparities could have long-term ramifications for the sector’s future growth trajectory.
Despite the challenges, the survey reveals positive indicators such as strong demand for labor and robust investment intentions among manufacturers. Recruitment intentions remain strong, indicating ongoing efforts to attract and retain talent within the industry.
Looking ahead, the survey forecasts a rebound in output and total orders in the next three months, suggesting cautious optimism among manufacturers. However, concerns persist regarding the impact of weak demand in overseas markets and the consequences of Brexit on UK trade dynamics.
The survey also highlights the structural nature of skills shortages and vacancies in manufacturing, with employment balances remaining elevated since the EU referendum. This underscores the importance of addressing skills gaps and investing in workforce development to sustain long-term growth.
Investment intentions have shown a positive trend, reflecting a favorable response to government initiatives such as full expensing announced in the Autumn Statement. However, Make UK’s economic forecasts remain modest, with manufacturing growth projected at just 0.1% this year and 0.8% in 2025.
In conclusion, while manufacturers demonstrate resilience in the face of challenges, there is a pressing need for concerted efforts to address structural issues and provide long-term support for the sector. The findings of the Q1 Manufacturing Outlook survey serve as a valuable resource for policymakers and industry stakeholders as they navigate the path towards sustainable economic recovery and growth.