UK manufacturers continue to invest despite bleak outlook
By Benjamin Chiou
Date: Monday 18 Mar 2024
(Sharecast News) - Confidence levels among UK manufacturers remain "robust" despite a subdued economic outlook, according to a survey published on Monday by Make UK and the accountancy firm BDO.
The quarterly Manufacturing Outlook report, which surveyed 326 companies between January and February, found that recruitment and investment intentions were "fairly strong" in the first quarter even though the general economic picture was "flat".
Recruitment intentions remained at +12% on balance, rising to +14% next quarter, while investment intentions increased from +10% in the fourth quarter to +15%.
"Apart from the start of the pandemic, employment balances have been at elevated levels since the EU referendum, indicating that skills shortages and vacancies in manufacturing are now structural," the survey said.
The survey also found that the balance on output fell significantly to +5% from +20% the preceding quarter, though it is expected to rebound to +31% in the second quarter. Total orders remained at +7% in the first quarter but are tipped to improve to +24% in the next three months.
"While manufacturers' own confidence remains robust, the overall prospects for the sector are weak for the foreseeable future," said Fhaheen Khan, senior economist at Make UK.
According to Make UK, the manufacturing sector is poised to grow by just 0.1% in 2024 and 0.8% in 2025, compared with wider GDP growth of 0.6% and 1.6%, respectively.
Khan added: "While there are clearly external factors at play, the UK economy has a fundamental growth problem which a business as usual policy process simply will not address. The next Government of whatever colour must address this fundamental problem as a matter of national urgency, beginning with a long-term industrial strategy which will really shift the dial on the UK's economic performance."
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