East Midlands manufacturers have seen an improving economic outlook as the domestic and global markets have improved, easing fears of a significant recession for industry this year.
The findings in the Make UK/BDO Q2 Manufacturing Outlook survey show a marked pick up in the last quarter with both output and orders increasing significantly to balances at +57% and +43%, both substantially ahead of the national average. In particular, the East Midlands has benefitted from the pick up in the automotive sector as chip shortages and supply chain blockages have eased. Car registrations increased for the tenth successive month in May.
In line with this improving picture job prospects are improving substantially with the balance of companies increasing recruitment in the last three months at +14%, jumping substantially to a balance of +36% in the next quarter. East Midlands companies are also planning to boost investment with the balance of companies planning to increase investment at +7%, below the national average but still in positive territory.
In terms of overall output this year Make UK and BDO are forecasting a contraction of 0.3% although this is a significant improvement from the contraction of -3.3% made in Q1 and the -4.4% forecast at the end of last year. However, Make UK is maintaining its previous forecast for growth of just 0.8% in 2024. UK GDP growth is at 0.4% for 2023 and 1.3% for 2024.
Charlotte Horobin, Midlands region director at Make UK, said: “Manufacturers in the East Midlands are seeing a gradually improving picture but the word ‘gradually’ is doing a lot of heavy lifting.
“However, companies are at least seeing a relative period of stability after the political and economic turmoil of the last few years when they have spent most of their time firefighting. Substantial challenges still remain and so long as there is an absence of an overarching industrial strategy growth prospects will remain anaemic at best.”
Jon Gilpin, head of manufacturing at BDO in the Midlands, said: “Despite the first half of the year seeing some pressures easing for local manufacturers – and the short-term prospects looking healthier for it – there are longer-term systemic challenges in the UK market, with built-in inefficiencies that need to be addressed urgently in order for manufacturers to effectively plan and invest.”
