South West manufacturers end year in positive mood

By Anita Jaynes on 5 December, 2017

Manufacturers in the South West are ending the year in a healthy position, according to a closely watched survey published today by EEF, the manufacturers’ organisation and accountancy and business advisory firm BDO LLP.

The Manufacturing Outlook survey for the fourth quarter shows output across the region dipped slightly from the last quarter to +29% but this remains strong and healthy by historical standards.

Overall orders also dipped slightly to +19% but also remain healthy by historical standards and are expected to pick up next quarter. This reflects the national picture of a sector benefitting from increasing demand from Europe and other growing markets around the world.

This strong performance and the need for extra capacity continues to boost recruitment amongst firms in the South West, with recruitment intentions remaining healthy at +19%. After a long period of growth in investment intentions to historic highs in the third quarter, these weakened to +7%.

However, business confidence amongst South West manufacturers as they approach the start of 2018 slipped slightly although it remains at more normal levels since the indicator was introduced to the survey three years ago.

As a result of the strong conditions for manufacturing through 2017 and the positive outlook for 2018 EEF has upgraded its forecasts for the sector to +2.1% and 1.4% respectively. This is faster than the UK economy overall where, in line with the OBR forecasts at the Budget, EEF expected tepid UK growth of 1.5% in 2017 and 1.3% in 2018.

Commenting, Martin Strutt, Region Director for EEF in the South West, said:

“Stronger global growth has cemented the foundations for growth in manufacturing this year, but the sector’s contribution to the UK economy has been greater than most expected. Not only have we seen consistently positive survey responses in each quarter this year, but growth has been evident across all industry segments and UK regions in 2017.

“There is some confidence that this momentum will carry into 2018, but as we head towards the Brexit end game we need manufacturing to produce the same trick of broad based growth again next year. As we see more companies investing and capitalising on global growth, we’ve become more upbeat in our forecasts for the growth outlook. Government’s industrial strategy is now out of the starting blocks but it needs to maintain a steady pace on delivery of its policy commitments to anchor manufacturers’ growth and investment in the year ahead.”

Paul Falvey, Partner and Head of Manufacturing at BDO in the South West, said:

“Manufacturers in the region have ended the year in a healthy position and positive mood. The sector’s performance is being driven by increasing demand from around the world, in particular Europe. The task of government is very clear: it needs to deliver a Brexit that minimises disruption to manufacturers – they are the economic engine of the UK economy.

“It is encouraging for manufacturers to now see further detail of the Government’s long-awaited Industrial Strategy. However, it is critical that the Government commits to the strategy over the long term (15 to 20 years), avoiding the disruptions of political cycles and encouraging manufacturers to commit to significant capital investments to boost growth and productivity.”