Tuesday 22nd January 2019
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Strong start to year prompts manufacturers to invest more

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Investment plans at manufacturers in the East of England have risen for the fourth quarter running after firms have seen a strong start to 2018 thanks to strong global demand and a pick-up in the UK although recruitment plans have been reined in slightly, according to a first quarter manufacturing outlook survey from EEF/BDO.

It suggests manufacturing firms are continuing to ignore Brexit-related political uncertainty at home as growing global demand particularly from European markets feeds growth across the supply chain and prompting EEF to upgrade its forecasts for the sector for this year and next.  Both output, +32 per cent and orders +41 per cent are high by the historic standards of the survey.

Investment intentions by East of England manufacturing firms rose by a healthy +28% and whilst intentions to recruit by companies dipped to +11%, it follows a strong run of taking more employees and remains well in positive territory.

EEF has upgraded its forecasts for the sector to +2.0% from 1.4% for 2018, faster than the overall UK economy where of 1.5% in 2018 is forecast. Next year it predicts growth slowing across the economy to 1.3 per cent and in manufacturing to 0.6 per cent.

Charlotte Horobin, Region Director for EEF in the East of England, 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.

“While this will help top line growth in UK industry and the wider economy it’s also important that the global race to increase investment and adopt new technology is not one in which the UK is left behind. As the Chancellor sets out some thinking about longer term economic priorities in his Spring statement next week, manufacturers will want to see a focus on how the new industrial strategy can help cut through Brexit uncertainty and turbo-charge investment ambitions right across manufacturing supply chains.”

Commenting, Keith Ferguson, Partner and Head of Manufacturing at BDO in the East of England, said: “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 in the East of England 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.”