Yorkshire & Humber manufacturers have seen a sharp rebound of activity during the third quarter of the year, with signs that pent up investment demand has been turned on, although recruitment intentions remained weak.
According to the Make UK/BDO Q3 Manufacturing Outlook survey, output and orders in the third quarter came in very strongly at a balance of +39% and +44% respectively while investment intentions jumped sharply to a balance of +29%, indicating that pent up demand has been switched on.
However, this more positive picture has not translated into recruitment, which turned negative (-6%), indicating the increase in National Insurance Contributions continues to take its toll.
The results have also shown the United States has recovered its position as the second most favoured market for growth prospects, having dropped out of the top three global blocs in Q2 for the first time in the history of the survey.
However, the survey also shows that almost three quarters of companies (70%) expect further increases in business tax in the forthcoming Budget at a time when a similar number (68%) have said their costs have already increased more than expected in the last six months.
As a result, almost three fifths of companies (58%) have already raised prices this year, while over half (53%) intend to do so in the next six months, highlighting the ongoing inflationary pressures for manufacturers.
Looking forward, growth forecasts for the sector remain weak with output still forecast to fall by -0.1% this year and -0.6% in 2026.
Dawn Huntrod, region director of Make UK in the North, said: “After a period of considerable uncertainty in global markets, these figures are an encouraging sign that Yorkshire & Humber manufacturers’ confidence is improving and, more importantly, being translated into growth and investment.
“However, one swallow doesn’t make a summer, and with UK and European markets in particular remaining anaemic it wouldn’t take much to knock prospects for further growth.
Steve Talbot, head of manufacturing at BDO in Yorkshire, added: “These latest findings offer a glimmer of hope for the sector across Yorkshire and the Humber. Despite what has been a relentless year by all accounts, manufacturers have somehow boosted their output and doubled down on their investments to match.
“The government identified Yorkshire and the Humber as a region with significant growth potential in its Industrial Strategy, but forecasts remain weak and recruitment intentions are in negative territory. With the Budget looming, manufacturers across the region need robust signalling from the government that their investments are worth the risk.”
