According to a survey published by EEF and BDO LLP, Britain’s manufacturing industry has continued to benefit from momentum seen at the end of last year, thanks to an upswing in global demand combined with a pick-up in the UK market.
The EEF/BDO Manufacturing Outlook Q1 survey shows manufacturers are continuing to ignore the ongoing political uncertainty at home as improved global demand, from European and capital equipment markets in particular, continues to feed growth across most of the manufacturing supply chain.
It found two thirds of manufacturers saw the EU as offering good prospects for growth (59 per cent in Q4 2018) with the next best markets of Asia and North America seen as supportive by around a quarter of companies.
Lee Hopley, EEF Chief Economist, said: “Manufacturing activity stepped up a gear through 2017 providing industry with some decent momentum coming into this year. The importance of a buoyant global economy to export-focused manufacturing sectors is again reinforced, with growing overseas demand encouraging international manufacturers to ramp up their investment which in turn is spurring particularly strong activity in UK capital goods sectors."
The survey also shows some balances have come off the multi-year highs seen in the second half of last year but output, orders, investment and recruitment all remain significantly above their long-run average.
As a result of the strong performance by manufacturing through 2017 and the positive outlook for 2018, EEF has upgraded its forecasts for the sector to +2.0 per cent from 1.4 per cent previously.
This is faster than the UK economy overall, where EEF is forecasting growth of 1.5 per cent in 2018.
Tom Lawton, Partner and Head, BDO Manufacturing, added: “Throughout 2017, the UK manufacturing sector proved itself to be remarkably resilient and delivered a strong overall performance and it is promising to see this is being continued into the first quarter of 2018. With healthy output and order balances and growing export demand, manufacturers are continuing to recruit and invest – providing a much needed boost to the UK economy.”
“These results do indicate continued and growing opportunities in the EU and around the world but the sector also faces the challenges of the uncertainty of Brexit and the increasing use of automation and Industry 4.0. Therefore, it is more important than ever for the Government to provide real clarity on its plans for a working and effective Industrial Strategy and Brexit. Manufacturers will need this clarity if they are to continue to commit to the significant capital investments required to support long-term growth.”
The survey was carried out between 31st January-21nd February 2018 and covered 378 responses.