Make UK/BDO Manufacturing Outlook Report – Q4 2023

Make UK/BDO Manufacturing Outlook

Make UK/BDO Manufacturing Outlook

UK Manufacturing output surges as companies plan for 2024

The sharp slowdown in activity reported by manufacturers in the third quarter of the year hasn’t continued into the final quarter, with manufacturers seeing output surge three times faster than orders.

Our Make UK/BDO Manufacturing Outlook report details the results from our latest survey, in partnership with Make UK, into the performance of manufacturers across the UK. 

Download the Q4 report to find out the key drivers for the surge in output this quarter and get detailed insights into the performance of UK manufacturers over the past three months across our core indicators – confidence, output, orders, employment, and investment – including expectations for 2024. 

Download Q4 Report
 

 

If you would like to discuss any of the topics raised in this report, please get in touch with Richard Austin or your dedicated BDO Manufacturing partner.

Download our Make UK/BDO Q4 Manufacturing Outlook Report for detailed manufacturing sector insights.

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The Manufacturing Outlook campaign is a Make UK/BDO partnership providing the most comprehensive barometer of the economic climate facing UK manufacturers, providing up-to-date and detailed intelligence on the state of manufacturing across the UK economy. 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.

The manufacturing industry is hugely important for the UK economy, trade and investment. UK manufacturing employment stands at over 2.5 million people and manufacturing accounts for 51% of all UK exports. Manufacturing also accounts for 15% of total UK business investment and 64% of all UK business research and development.

The turn of the decade brought with it refreshed optimism for the UK manufacturing industry however, this waned quickly as the COVID-19 pandemic spread across the globe. The pandemic brought with it a lot of challenges, from overnight factory closures, disrupted supply chains to prioritising the health and safety of employees. Alongside this, the EU–UK Trade and Cooperation Agreement (TCA) impacted the flow of goods, with many manufacturers experiencing delays at borders.

The sector continues to prove its resilience as it navigates the challenges it faces, and our quarterly Manufacturing Outlook reports clearly demonstrates the impact of these. Over recent years we have seen a series of the worst and best figures ever reported by our Manufacturing Outlook survey.

Supply chain issues and inflation

  • Recent manufacturing output growth has been restricted by the continued input price inflation the industry has faced both in the labour and material markets. The industry has struggled to meet demand, particularly in instances where orders and quotes were given months ago and the prices of manufacturing inputs have continued rising in the intervening period, leaving manufacturers in the challenging position of either renegotiating existing contracts or absorbing the reduction in their margins.
  • Following the record-breaking UK orders balance seen in the third quarter of 2021, UK orders growth has continued to slow down. However, more manufacturers are reporting growth in the UK markets than there are businesses reporting growth in exports. It is likely that challenges around trade coupled with unreliable and expensive global logistics have made domestic trade more attractive.
  • Prices and margins - the biggest challenge manufacturing in the UK is facing right now revolves around cost. From rising input prices to logistics, energy, wages, and higher tax bills looming in the months to come businesses are feeling the pinch more than they have ever before.

The effects of Brexit and COVID-19 on UK manufacturing

  • Since the end of the transition period, export orders have failed to keep pace with the domestic market as international customers shied away from UK markets, and domestic suppliers began to seek new relationships at home.
  • Employment in the industry has been receiving a lot more focus over the last few quarters as the labour shortage in manufacturing continues to weigh on businesses’ ability to raise output levels to their post-pandemic recovery potential. There are many factors that are exacerbating the challenges manufacturers are facing when it comes to accessing labour, with the leading issues being: increased difficulty sourcing labour from the EU following the UK’s exit from the Bloc, an expensive labour market and changing workforce attitudes towards flexible working.

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