UK manufacturers have yet to experience a noticeable improvement following the recent change in government, though many remain hopeful that the new political environment will foster better economic conditions in the future. According to the Q3 Manufacturing Outlook survey, conducted by Make UK in partnership with business advisory firm BDO, there is cautious optimism among the sector, even as current growth continues to struggle.
The survey revealed that while growth remains slow, nearly 58% of manufacturers believe the recent political shift will translate into improved economic performance over the next year. Only a small percentage, around 6%, predict a decline in GDP for 2024, signalling a general sense of positivity within the industry. Make UK has responded to this sentiment by adjusting its forecast for the UK economy in 2025, increasing the expected growth rate from 0.8% to 1.8%.
Although the balance of output dropped from 9% in the second quarter to -2% in the third quarter, it is expected to rise sharply to 33% in the next quarter, suggesting a brighter short-term future.
Orders have followed a similar trend, with total orders declining from 14% in Q2 to 7%, but forecasts point to a recovery, with an anticipated increase to 33% in the upcoming months. Notably, export orders have outpaced domestic orders, with export growth reaching 11% compared to a 4% decline in UK orders. This dynamic is expected to shift in the next quarter, with UK and export orders both projected to rise to 27% and 26%, respectively.
Recruitment in the sector has also taken a downturn for the first time in four quarters, with intentions dropping from 26% to -1%. Nevertheless, this appears to be a temporary setback, as companies plan to ramp up hiring in the next three months, with recruitment projections rising to 22% in response to expected demand and improved economic conditions.
Confidence among businesses has reached its highest point since the survey began tracking this measure in 2014, matching levels seen only during the post-COVID economic rebound. Despite this, investment intentions have moderated slightly, dipping from 15% to 11%.
The survey included responses from 307 companies and offers a snapshot of a sector poised for potential recovery, even as it navigates current economic uncertainties.
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