Manufacturing Outlook 2023 Q3
18.09.2023
Britain’s manufacturers are battening down the hatches amid a very sharp slowdown in activity and potential recession, according to the latest data from Make UK and business advisory firm BDO.
The findings in the Make UK/BDO Q3 Manufacturing Outlook survey show that the positive picture of the first half of the year has now gone sharply into reverse, with recruitment plans ceasing and orders slowing at home and abroad. As a result, Make UK has cut its forecast for growth for 2023 with output set to fall this year, while the forecast for next year is within the margins of no growth at all.
However, the overall picture marks a strongly emerging sectoral divergence with the other transport (largely aerospace), food and drink, and chemicals sectors continuing to perform very strongly relative to other sectors. The aerospace sector in particular has benefitted from a large number of orders for new aircraft over the last year, as well as a strong rebound in long haul international travel.
In response to the downturn, Make UK is calling on the Chancellor to use his limited resource to target measures on skills, digitalisation and productivity and energy efficiency at the upcoming Autumn Statement.
Manufacturers are seeing a very sharp slowdown in activity as the potent cocktail of rising interest rates, cost of living and slowing overseas markets bites hard. As a result, they are now battening down the hatches in the expectation that the next year is going to be anaemic at best and, potentially, much harder.
While it’s clear the Chancellor doesn’t have a financial war chest to try and boost growth he should use his Autumn Statement to bring forward carefully targeted measures which could make a difference to companies’ efforts to boost skills and productivity. He should use whatever is available to get the best bang for his buck.
There’s an argument here that says the Bank of England’s plan to raise interest rates and stamp out inflation is working. But it is the scale of the fall in the indicators this quarter that comes as a surprise and highlights the extent of the slowdown on UK manufacturing.
Manufacturers are entering the final quarter on an increasingly unsteady footing. In the absence of an overarching industrial strategy from government, businesses will be forced to cut back, protect margins and focus on building on operational efficiencies over the next few months
