Britain’s manufacturing industry remains on strong foot, within UK exports up as the domestic manufacturing industry continues to benefit from a weaker pound in a strengthening global economy, according to a new survey.
The survey comes from the manufacturers’ organisation, the EEF. Their quarterly report into the current state of the British manufacturing is completed in conjunction with the accountancy firm BDO, and said that Brexit-related uncertainty was presenting “less of a drag than previously expected” on the economy.
That’s excellent news for UK JIC fitting and SAE adapters like us, who have seen positive output and new order balances, along with large swathes of the UK’s manufacturing industry.
They said "a combination of the weaker exchange rate and enduring healthy demand conditions should see exports continue on the up", which has put factory output on track for its fastest growth since 2014 – a fact held up by the Markit/CIPS reports from the last two months, which have found remarkable growth in the industry.
Demand was especially “buoyant” in European markets, with 61% of firms saying they’d seen an increase, thanks to British goods becoming cheaper, due to the decreased value of sterling on the currency markets.
The report also suggested that higher import prices may, in theory, encourage UK households to move towards domestically produced goods and services. However, this is based on the notion that British goods and services will become cheaper, somewhat ignoring the higher costs manufacturers are facing.
As a result of the positive trends the EEF have found, they’ve revises up their forecasts for factory output for 2017 and 2018 to 1.3% and 0.5% - up from 1% and 0.1% respectively.
Lee Hopley, chief economist at the EEF said: "Industry is reporting that output and orders have continued to head higher in recent months and the recovery in manufacturing globally is a big part of the story.
"It's very encouraging that UK manufacturers have positioned themselves to capitalise on the windfall of a competitive pound and resurgent world economy."
However, she stressed the need for a new industrial strategy that was “bold” and “set in stone”, by whichever party takes office next, warning that though the current situation in UK manufacturing is positive, the path ahead is a dangerous one, suggesting “it is not plain sailing from here”.
In particular, Lee said that there’s likely to be a continued squeeze on household incomes and the possibility of “no deal” on Brexit (as touted by the Tories) could damage trade in a series way, whilst causing rising raw material costs, skills shortages and falling investment in key areas of UK manufacturing.
"There is the continuing challenge of managing input cost increases, ensuring success in attracting and retaining the skills that are in increasing demand and driving up investment in the sector," she added.
Continuing the pro-EU stance was Tom Lawton, a partner at BDO who added: "It is vital that we remain open for business and negotiate new trade agreements with the EU and other key markets so that international markets remain open and accessible as soon as Brexit is completed."
It remains unclear which party will win a working majority at the general election called by Theresa May, although present indications suggest that the only thing which can stop a Conservative win would be a strong youth vote.