Tuesday, December 5, 2023

Yorkshire & Humber manufacturers bounce back as clouds lighten

Yorkshire & Humber manufacturers are seeing a rebound in activity in the first quarter of the year 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 Q1 Manufacturing Outlook survey show a marked pick up on the picture in the final quarter of 2022. The figures echo the gradual improvements in other data such as the UK and European PMIs which are now only just in negative territory, as well as a strong pick up in demand from China.

According to Make UK and BDO this improvement in Yorkshire & Humber in particular could be down to strong demand in the steel and food and drink sectors where the region has a significant presence, possibly due to investment in infrastructure and construction projects.

Both output and orders picked up in the region with the order balance of +22% especially strong. This was driven primarily by UK orders which ties in with the strength of demand for steel. On the back of this improving picture employers’ intentions to both recruit and invest also improved, albeit from a very negative picture last quarter. Looking forward manufacturers in Yorkshire & Humber are more confident about prospects with output and orders predicted to increase substantially, reflected in further improving job prospects.

However, despite the improvement this quarter, Make UK is still cautioning against the worst of conditions being over and is still forecasting a contraction for manufacturing in 2023 as the substantial challenges the sector is facing show few signs of abating.

Dawn Huntrod, region director in the North at Make UK, said: “Manufacturers in Yorkshire & Humber have seen a rebound at the start of the year as conditions have improved in their major markets and business confidence has improved. However, one swallow doesn’t make a summer and it is far too early to say the worst has passed given the significant challenges the economy faces.

“However, the Budget should help boost investment in the short to medium term although ideally, full expensing should be made permanent to better reflect the investment cycle for manufacturers.”

Steve Talbot, head of Manufacturing at BDO in Yorkshire and Humber, added: “Our research with Make UK shows some good news for the region, which ties in with the demand for steel. However, inflationary pressures are continuing to hit UK manufacturers with the increased costs still being passed on.

“UK manufacturers need ongoing certainty on a range of fronts, including long-term energy support, and assistance to attract a sustainable workforce. The recent government announcements do little to address the immediate threats to UK manufacturers resulting from high energy costs.”

In terms of overall output this year Make UK is forecasting a contraction of -3.3% (a slight improvement from -4.4% forecast at the end of last year) and growth of just 0.8% in 2024.

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