Strong end of year for regional manufacturers

Regional manufacturers have enjoyed a strong end to 2019 – and while caution remains ahead of the New Year as political uncertainty drags on – investment and recruitment intentions are up too.

According to the Quarter Four Manufacturing Outlook survey published by Make UK, the manufacturers’ organisation and business advisory firm BDO LLP, output and total orders in the region remained reasonably healthy at +20 per cent and +9 per cent respectively.

Both of which are significantly ahead of the national picture overall, though output may have been boosted by stockpiling ahead of the October Brexit deadline.

The improvement in total orders comes on the back of a modest improvement in UK orders, while by contrast export orders have performed very strongly at a balance of +20 per cent, almost double the national figure and reflects well on companies in the region at a time of difficult world markets and trade wars.

Looking ahead, however, overall conditions are expected to remain anaemic over the next 12 months and Make UK is now forecasting manufacturing growth of just 0.1 per cent in 2019 and downgraded to 0.3 per cent in 2020 (down from 0.6 per cent). GDP is forecast at 1.3 per cent in 2019 and 1.4 per cent in 2020.

June Smith, regional director at Make UK in the North of England, said: “Uncertainties about the outcome of Brexit and the impending general election continue to weigh on the UK manufacturing sector but the build up to Christmas has brought a much needed boost.

“Christmas, and the end of the year, are a time when people reflect on the past and try to begin afresh. Manufacturers will hope that the results from this quarter’s survey are a sign that the economy is beginning to grow afresh once more.”

In addition, intentions to recruit by Yorkshire and Humber companies remain strong at a balance of +23 per cent while investment intentions were the strongest of any UK region at +33 per cent, way above the national figure of +3 per cent.

As a result of an improved picture since the last quarter business confidence amongst manufacturers for their prospects looking forward has increased and is above the average for all UK regions.

Steve Talbot, head of manufacturing at BDO in Yorkshire, said: “Investment is crucial to the future of our region’s manufacturing heritage and it is positive to see investment levels in Yorkshire bucking the national trend despite a series of declines UK-wide since the start of the year. But, while this is good news, and also possibly a sign that the prospect of a no-deal Brexit is less of a short-term worry, manufacturers are still facing challenging times.

“Only when the uncertainty over the direction of travel on Brexit is ended will manufacturers really turn on the taps of much needed investment to boost their productivity performance.”

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