For most of last year our blog posts all had a similar theme – the fact that British manufacturing output, despite the doom-mongers, continued to defy gravity. Happily the New Year has kicked off with more of the same – and we hope for you too! As manufacturers and sub-contract suppliers of metal products, it’s great to see the industry as a whole thriving.
Onwards and upwards
In November of last year we saw the seventh consecutive month of growth in UK manufacturing output. Official figures show industrial output rose by 0.4% in November. This amounts to the fastest rate of expansion since early 2008 and the sector is enjoying its strongest run of growth since 1997.
It also represents the longest spell of rising output from Britain’s factories in 23 years. Leading think tank, The National Institute of Economic and Social Research, forecasts that this puts the economy as a whole on course to record its fastest rate of growth since late 2016. They are pencilling in expansion in gross domestic product of 0.6% in the final quarter of 2017, up from 0.4% in the previous three months and above the latest City estimates.
Renewable energy projects, fabrication of machinery and equipment, boats, aeroplanes and cars for export helped make output 3.9% higher in the three months to November than in 2016. The biggest contribution come from energy supply, which increased by 3.2% – mainly because the temperature was warmer than average in October, but colder than average in November.
This is in marked contrast to the construction sector, where output in the three months to November fell by 2%, compared with the previous three months. That was the industry’s biggest quarterly fall since August 2012, with the only bright spot for the sector being a 1.2% increase in new housing.
What’s behind the success story?
British manufacturing is riding high on two big trends – a weaker pound and healthy global economic growth. Sterling’s fall in value following the Brexit vote has made UK exports more competitive. And for the first time since the financial crisis the three main engines of global growth, the USA, China and Europe, are performing strongly at the same time.
For example, car production increased in October as rising exports more than made up for falling demand in the UK. Just over 157,000 cars rolled off production lines in October, 3.5% more than the same month last year, according to the Society of Motor Manufacturers and Traders (SMMT). Exports were up by 5%, with more than 1.1m cars built for overseas markets so far this year, compared with a 2.9% fall in domestic demand.
Lee Hopley, chief economist at manufacturers’ organisation EEF, said: “UK manufacturers were, in the main, in good shape as 2017 came to a close, with the majority of sub-sectors enjoying growth. Manufacturers’ expectations for the year ahead point to output and export growth being maintained through this year on the back of continuing support from a burgeoning global economy. This, together with an ongoing commitment from government to deliver on its industrial strategy, will be crucial in helping to propel the sector forward,” she said.
EEF’s seventh annual Executive Survey, in partnership with global insurer AIG, reports on UK manufacturers’ expectations for the year ahead – and the outlook is very positive. On every firm level indicator in the survey (productivity, profit margins, export sales, domestic sales, temporary employment and permanent employment) more manufacturers are expecting growth than decline, and in every case responses are more upbeat than they were going into 2017.
Happy to help you
So, the industry has enjoyed a terrific 2017 and things are looking pretty good for the months ahead. We’re certainly upbeat about 2018 and expect to be busy producing for our high-quality light-weight metal products. These include a wide range of components, office furniture, bespoke metal shopfittings and game bird feeders. Please don’t hesitate to get in touch if you’d like to discuss your requirements – you are assured of expert advice and a keenly competitive quote as you benefit from our value engineering experience.