Despite the numerous worries surrounding Brexit British manufacturing seems to be doing rather well. Although at Dymond Engineering we operate in a relatively niche marketplace, making a wide variety of custom metal products including desks, shelves, birdfeeders, retail displays and component parts, the fact that the manufacturing sector as a whole is benefitting from a number of positive factors is good news for all of us – “a rising tide raises all ships”. In this post we share upbeat reports from four different sources that are full of feel good factors.
Bank of England Agents’ Summary of Business Conditions Qtr. 1 2017
This review of the first quarter of 2017 makes very encouraging reading with manufacturing output growth for the domestic market continuing its upward trend. The automotive, aerospace, industrial chemicals, pharmaceuticals and construction products subsectors showed the strongest demand growth and a significant proportion of that reflected healthy activity in export supply chains.
Goods export volumes growth also continued to increase following sterling’s recent falls and reflecting stronger world demand growth. The pickup, however spread across most subsectors – at home many manufacturers benefited from increased price competitiveness relative to firms based abroad. Some companies also reported increased domestic sourcing, especially in the food and drink sector.
SWMAS Manufacturing Barometer Results: South West
The South West Manufacturing Advisory Service Senior regularly canvasses the view of decision makers within small and medium sized manufacturers to gather their views on a range of issues. The most recent feedback suggests the sector is proving resilient with 57% of firms experiencing an increase in sales turnover in the past six months, up from 45% in the last survey, and 5% up from the same period last year.
Optimism is also buoyant with a noticeable jump in future turnover expectations – these have increased from 56% last quarter to a current level of 68%. Investment over the past 6 months in both new technology and new machinery has remained static with only a 1% increase since the previous quarter. However, firms are forecasting increases over the next 6 months, with 50% expecting to up their spend, compared to 43% last quarter.
Finally, there has been a slight dip in the number of firms expecting to increase employment in the next six months, decreasing from 48% last quarter to 46%. However, this percentage shows there is still a significant number of businesses looking to recruit, which is good news for the sector and for the UK economy as a whole.
CBI Industrial Trends Survey
This report suggests that UK’s manufacturers’ export order books have risen to the highest level in over three years, while expectations for growth are at a more than two-decade high. 423 firms polled reported that export order books were the highest since December 2013. Total order books remained firm in March, after strengthening to a two-year high in February. Output growth rose at its quickest pace since July 2014 in the three months to March, with manufacturers anticipating that it will accelerate further over the near-term. Meanwhile, firms’ expectations for selling price inflation remain elevated for the quarter ahead.
This study shows that UK manufacturing got off to a much stronger than anticipated start to the year, providing a much-needed boost to confidence, recruitment and investment.
The balance of firms reporting an uplift in output (31%) and orders (29%) is double what was expected, with the output balance hitting its highest level since Q3 2013. Importantly, all of UK manufacturing’s sectors are seeing this positive trend. The figures demonstrate manufacturers’ ability to capitalise on a broad based export recovery fuelled not only by the drop in the value of sterling, but also by an improvement in the economic performance of key markets. A balance of 54% of manufacturers report positive demand conditions in Europe while, overall, just a fifth of firms (20%) are yet to see any pick up in overseas markets.
Business confidence, which took a temporary dip battering following the referendum result, continues to climb and is now at a level last seen in 2015. This, combined with the fact that firms are much busier than they had forecast, is supporting an increase in employment and investment intentions as firms strive to increase capacity.
The positive and broad based trend looks likely to extend into the next quarter and EEF has revised its growth forecasts upwards to 1.0% for manufacturing and 1.8% for GDP.
The outlook is sunny
So, all these reports indicate that manufacturing in Britain is in good shape – and likely to remain so over the foreseeable future. We’re certainly seeing strong demand for our design-engineering, value-engineering and metal fabricating services. Having said that, we are always happy to help 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.