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Positive manufacturing outlook forecast
Published:  09 June, 2021
All the indicators are now substantially positive with output volumes growing at the fastest rate in the survey’s thirty-year history

By Make UK chief executive, Stephen Phipson

After a year which has seen an unprecedented economic and social shock the latest Make UK Manufacturing Outlook survey provided some welcome good news. All the indicators are now substantially positive with output volumes growing at the fastest rate in the survey’s thirty-year history and the forward-looking indicators suggesting that this may reach another record in the third quarter to come. This positive picture is also being translated into investment and recruitment intentions which have surged as firms invest and hire in order to meet demand. The one caveat to raise, however, is that we are coming from a very low base having seen the figures in the survey touch record lows in the second quarter of last year when the pandemic first struck, survey balances that were worse than the lowest levels reached during the financial crisis. To put this into some real figure perspective the extent of the downfall over the last year has seen manufacturing lose ten per cent of output worth some £18 billion. This will take more than a short-term boost over one quarter to recover but the signs are good that the loss in output will be recovered quicker than expected with Make UK’s forecast for growth this year doubling to just under eight per cent, faster than the economy overall. Should this growth materialise then the loss of output will be received some six to nine months ahead of schedule by mid 2022. Delving beneath the headline figures the survey also revealed the increasing impact of material shortages and higher shipping and freight costs which are feeding through into higher prices, both domestically and for export orders. The survey also showed that for some sectors, such as aerospace, the light at the end of the tunnel continues to be some time away although the automotive sector is showing firm signs of life after a sharp drop in sales over the last year. Overall, however, the picture for manufacturing is much brighter and more positive than could have been foreseen at the start of the year. The key now is to see the forecasts hold for the second half of the year when the restrictions on the economy will hopefully be firmly removed.