UK manufacturing output forecast to fall sharply
By Abigail Townsend
Date: Monday 12 Dec 2022
(Sharecast News) - UK manufacturing output is expected to tumble, an industry survey showed on Monday, after the sector was rocked by higher costs and weakening consumer demand.
According to the latest quarterly Make UK-BDO Manufacturing Outlook survey, output is set to fall by -4.4% in 2022 before contracting -3.2% in 2023.
Make UK acknowledged that 2022 was being compared to a "very strong" 2021, when the sector benefited from what it called a "pandemic bounce-back". But it is also a significant downward revision on the last forecast, made in September, for growth of 0.6% 2022.
Investment intentions also turned negative for the first time in seven quarters, falling to a balance of -5% from 7% in the third quarter.
The industry body said the sector was battling "deteriorating" economic conditions both at home and abroad, including increased costs, tighter fiscal and monetary policy and weakening consumer demand.
GDP is forecast to grow by 4.4% this year, before declining by 0.9% in 2023.
Richard Austin, national head of manufacturing at BDO, said: "Manufacturing input prices are growing so rapidly, it is little wonder UK manufacturers are having to pass the costs onto their customers to remain viable.
"The true impact of inflationary pressures and dwindling investment may not be immediately apparent in the sector, but they will be reflected in longer-term growth."
Stephen Phipson, chief executive of Make UK, said: "There is simply no sugar coating the outlook for next year, and possibly beyond. Even for a sector as resilient as manufacturing, these are remarkably challenging times."
Make UK and BDO surveyed 335 companies between 2 and 24 November.
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