06 March 2017

UK manufacturing has stronger start to 2017 than expected

The UK manufacturing sector has got off to a much stronger start to 2017 than expected, according to EEF and business advisory firm BDO LLP.

The Q1 2017 Manufacturing Outlook reports positives across all of the manufacturing sector’s key indicators.

EEF and BDO said that the balance of firms reporting an uplift in output and orders is double what was expected – 31% and 29%, respectively. The output balance was the highest level since Q3 2013.

All of UK manufacturing’s sectors are seeing this positive trend, they added. Additional findings show a balance of 54% of manufacturers reported positive demand conditions in Europe while, overall, just 20% are yet to see any pick up in overseas markets.

Business confidence also continues to climb and is now at a level last seen in 2015, while at the same time, with the crash in sterling driving higher input costs, manufacturers report that they are continuing to push through price hikes, with more still to come.

The research was conducted among 389 senior decision makers in manufacturing.

Lee Hopley, chief economist at EEF, said: “The post-referendum wobble that defined UK manufacturing’s performance in the second half of 2016 has been left firmly behind with manufacturers now rallying far more strongly than even they had predicted.

“The sharp rebound in exports has been instrumental in helping firms regain ground and, with investment, employment and confidence all on the up, the picture now is of a sector not quite in peak health, but certainly making a positive contribution to UK growth this year.”

Hopley added that the positive trend looks set to continue in the short to mid-term, but warned the longer-term outlook is more “unsettled” as certainty for manufacturers will be in short supply with risks potentially spinning out from the European elections, the new Trump administration and Brexit negotiations.

Adam Offord | @AdamOfford

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