Improved global demand continues to feed growth across most of the manufacturing supply chain, a new survey has revealed.
Published by the manufacturers’ organisation, EEF, and accountancy and business advisory firm BDO LLP, the EEF/BDO Manufacturing Outlook for the first quarter (Q1) of 2018 shows that demand from European and capital equipment markets, in particular, is helping UK manufacturers start this year in the same positive way they ended 2017.
Manufacturing activity stepped up a gear through 2017 providing industry with some decent momentum coming into this year, EEF Chief Economist Lee Hopley said.
“The importance of a buoyant global economy to export-focused manufacturing sectors is again reinforced,” she explained, “with growing overseas demand encouraging international manufacturers to ramp up their investment which in turn is spurring particularly strong activity in UK capital goods sectors.”
According to the survey, two-thirds of manufacturers see the EU as offering good prospects for growth, with the next best markets of Asia and North America seen as supportive by around a quarter of companies.
With output, orders, investment and recruitment all significantly above their long-run averages, EEF has upgraded its growth forecasts for manufacturing in 2018 from 1.4% to +2.0% (the EEF forecast for the overall UK economy this year is 1.5%).
EEF also notes that growth in world trade has been matched by a large improvement in the UK orders balance at the start of this year. Although export orders eased slightly (from +33% in 2017 Q4 to +29% in 2018 Q1), domestic order balances almost doubled (from +12% to +21%).
A word of warning was also issued: there are some sign in the survey that automotive and construction supply chains are seeing signs of weaker demand, which could see a greater sector variation in performance both this year and next.
