Welcome to the 2018 Q3 Manufacturing Outlook report in partnership with EEF.
Our latest quarterly survey points to trading conditions remaining largely stable for UK Manufacturers going into the second half of 2018 and companies expect this positive picture to be sustained into the final months of this year.
Activity in the manufacturing sector picked up slightly in the third quarter, representing the eighth consecutive quarter in which a positive output balance has been recorded and after a slow second quarter, manufacturers’ order books picked up in the third quarter. The pick-up in orders has been registered in both domestic and exports, not surprisingly, export orders are significantly higher. The EU remains the main UK customer and our latest survey shows a rise in the percentage of manufacturers noting a pick-up in demand from this market.
Our survey also points to some recovery in profit margins, which is contributing to another quarter of increased recruitment and a revival in investment intentions. Despite heightened levels of uncertainty, manufacturers are continuing to increase both headcount and capital expenditure, to meet increased demand requirements.
Looking ahead, confidence about firm level prospects is proving to be more durable than might have been expected, but the threat of escalating trade tensions and heightened concerns about a Brexit outcome that fails to deliver frictionless trade could quickly make trading conditions more difficult.
Tom Lawton, Partner and Head of BDO Manufacturing, comments:
“Despite ongoing uncertainty, UK manufacturers continue to demonstrate resilience, and some confidence in at least the short term future - driven by increasing global demand, particularly from Europe.
The continuing strength of demand from Europe emphasises its importance as a key trading area for UK manufacturers. The Government must minimise disruption to the sector as Brexit negotiations take place and ensure that Britain remains open for business with the EU - as well as other key international markets.”
Download the full Q3 report for more information and analysis of the UK manufacturing trends.
Download the manufacturing outlook Q3 Report
If you would like to discuss any of the topics raised in this report, please do not hesitate to contact Tom Lawton or your usual BDO Manufacturing partner.
Why manufacturing matters?
The manufacturing sector is hugely important for the UK economy, trade and investment. UK manufacturing employment stands at over 2.6 million people and manufacturing accounts for nearly half of all UK exports. Manufacturing also contributes 10% of all Gross Value Added. It is not hard to see why manufacturing is key to the UK’s trade balance and to see that this will become all the more true post-Brexit.
The Manufacturing Outlook Report is a EEF/BDO collaboration. It is important to us that we understand the challenges that you face in running your manufacturing businesses. It helps us use our skills, experience and knowledge to make a tangible difference to your business.