Manufacturing Outlook 2019 Q1
Monday 4 March 2019
The latest survey by Make UK and BDO shows the output for UK’s manufacturers remains stable. But for the second quarter in a row, the gap between orders and output continues to hint that stockpiling rather than consumer orders are driving output.
Europe continues to be the top market opportunity for manufacturers but, for the first time since 2016, the balance for demand coming from Europe is lower than 50%. This drop is tied to Brexit uncertainty with companies scared that input goods may be stuck at ports combined with a wider economic slowdown happening across Europe (UK included).
Compared to last quarter, employment and investment show some signs of pick-up, however employment balances are significantly higher than investment indicating that, in a period of uncertainty, manufacturers may be opting to hire extra staff to help boost output in the short term rather than make long-term investments in productivity enhancing equipment.
While it is good news that output remains stable, it is no surprise that all the economic forecasts indicate that this will not last. Manufacturing needs certainty over Brexit to boost orders and exports and to protect the jobs of nearly three million people working in the manufacturing sector across the UK
Given that a large part of the trading rationale for Brexit is the ability for the UK to increase trade with other countries, the continued downward trend in exports this quarter indicates how hard this could be in practice.
