While Britain as a whole has endured six weeks of uncertainty brought about by the Government’s unexpected decision to call a general election the country’s manufacturers have coped surprisingly well. Companies in this sector have kept their heads down and worked hard to maintain “business as usual”. This has certainly been the approach at Dymond Engineering – and we’ve seen steady demand for the wide variety of custom metal desks, shelves, birdfeeders, retail displays and component parts that we specialise in designing and making.
Strong figures fuel higher growth expectations
The latest quarterly survey by manufacturing lobby group EEF, in partnership with the BDO accountancy firm, shows that British factories are growing at their fastest pace in more than three years. Manufacturing output put on a sharp spurt with the balance of firms reporting growth rising to 31 percent in the first quarter of 2017. This is the highest level since the third quarter of 2013, when Britain was starting to shrug off the after-effects of the global financial crisis. For example, GKN and Meggitt, two British engineering firms, recently reported better than expected results and growing business orders. What’s more, the balance of firms expecting growth in the second quarter rose to 33 percent.
Taking these results into account EEF raised its forecast for growth in the sector to 1.0 percent this year. This is a big turnaround from their previous estimate of a 0.2 percent contraction. The organisation also upped its estimate for British economic growth as a whole to 1.8 percent from 1.3 percent. The recovery in manufacturing has also been shown in official economic data. In the October-to-December period of last year, factory output was up 1.2 percent from the previous three months, the strongest performance since the Brexit vote.
Summing up these results the writers of the report concluded that Brexit-related uncertainty was presenting “less of a drag than previously expected” with firms reporting positive output and new order balances, as well as strong rallies in confidence, investment and employment intentions.
Exports playing a big part in the success story
This excellent performance is partly explained by a robust export performance, helped by the fall in the value of the pound after the Brexit vote and a recovery in core markets in Europe. The report suggested that this buoyancy was set to continue, commenting that “a combination of the weaker exchange rate and enduring healthy demand conditions should see exports continue on the up”. Demand was especially strong in European markets, with 61% of firms saying they had seen an increase.
Meanwhile, higher import prices should in theory encourage UK households to move towards domestically produced goods and services and away from imported goods, it said.
EEF’s chief economist Lee Hopley said: “Industry is reporting that output and orders have continued to head higher in recent months and the recovery in manufacturing globally is a big part of the story. It’s very encouraging that UK manufacturers have positioned themselves to capitalise on the windfall of a competitive pound and resurgent world economy.”
Keep calm and carry on
This good news is slightly overshadowed by the fact we now have a hung parliament. Whilst the uncertainty this creates is not helpful to business it does suggest that we are less likely to get the hard Brexit being pursued by Theresa May before her poll disaster. She will probably have to back away from her “No deal is better than a bad deal” stance and this increases the likelihood of us getting a more favourable trading arrangement with Europe – something that most businesses, and especially manufacturers, will welcome.
We’re certainly pretty positive about the current situation and anticipate continued strong demand for our design-engineering, value-engineering and metal fabricating services. If you need high-quality light-weight metal products including components, office furniture and retail display systems – just get in touch if you have a job you’d like to discuss.