The UK’s manufacturers are ending 2017 on a high, with positive expectation for the year ahead, according to the latest survey from the EEF and BDO.
According to the ‘Manufacturing Outlook Q4’ survey, manufacturers are continuing to ignore the ongoing political uncertainty at home as improved global demand, from European markets in particular, and the increase in commodity prices is feeding growth across the manufacturing supply chain.
This is compensating for weaker UK demand as the squeeze on living standards and Brexit uncertainty continues to take its toll domestically.
This strong performance, across all sectors and regions, has led EEF to upgrade growth forecasts for manufacturing for this year and next, meaning the sector will outperform the economy overall.
Furthermore, the positive conditions in the fourth quarter mean that 2017 will be the first since the financial crisis when both output and order balances have been positive in every quarter throughout the year.
The bounce in business conditions seen over the course of this year is driving the need for investment in more capacity to fulfil increasing customer demands. As such EEF says it has seen the second successive improvement in investment intentions, with the balance of companies planning more capital expenditure hitting a three and a half year high.
“Stronger global growth has cemented the foundations for growth in manufacturing this year, but the sector’s contribution to the UK economy has been greater than most expected. Not only have we seen consistently positive survey responses in each quarter this year, but growth has been evident across all industry segments and UK regions in 2017,” said Ms Lee Hopley, EEF Chief Economist.
“There is some confidence that this momentum will carry into 2018, but as we head towards the Brexit end game we need manufacturing to produce the same trick of broad based growth again next year.
“As we see more companies investing and capitalising on global growth, we’ve become more upbeat in our forecasts for the growth outlook. Government’s industrial strategy is now out of the starting blocks but it needs to maintain a steady pace on delivery of its policy commitments to anchor manufacturers’ growth and investment in the year ahead.”
The full survey can be accessed here.