MakeUK’s 2021 Manufacturing Outlook report, produced in partnership with BDO, has been released detailing activities of UK manufacturers in Quarter 2 of 2021. The positive report comes a year after record-breaking lows were reported in 2020. Below we have detailed some of its findings.
Output
In the second quarter of the year, research has recorded the highest balance for output in the survey’s history. The total output has reached heights above what was predicted for output reported by manufacturers in the first quarter.
In the past three months output has been up 36%, with a further expected rise of 46% to be seen in the next three months.
Orders
The survey further indicates that overall orders in the last three months increased for manufacturers. It shows that 34% of manufacturers have reported an increase in orders, which is up 9% from the last quarter. This also represents the second highest number overall. However, the report states it is too soon to tell if the numbers represent new growth or expected growth due to the sector starting from a lower base.
UK Orders
The UK orders balance improved to 27% this quarter, this being a big change from the last quarter’s 6% and the highest reported in the survey’s history. UK orders balance is set to rise again in the next three months, with a prediction of 36%.
Export Orders
A balance of 22% has been revealed on export orders. This follows last quarter’s -8%. Strong increase in export orders is likely due to the steep declines witnessed immediately after the transition period finished.
As manufacturers continue to adjust to the new trading environment, it is predicted that export orders will continue to rise. A 33% rise is expected for Quarter 3 in 2021.
Employment and Investment
After negative outlooks in previous quarters, MakeUK’S Manufacturing Outlook has reported that both employment and investment have produced positive balance figures and have overtaken the already generous predictions that they were assigned in the last quarter.
With employment figures consistently trending negatively across the last four quarters, the survey positively states that numbers are finally moving upwards with a change in direction being signalled at the end of the last quarter. Furthermore, this looks set to continue into the rest of the year with employment reporting a predicted balance of 34%.
The survey notes that this rise has been experienced alongside the Government’s Job Retention Scheme, which at present is still in use until the end of September 2021. Previously it was expected no job growth would be seen while this was still active, however these figures represent the longstanding need manufacturers have for labour as their order books pick up with increased demand.
Positive investment numbers reported in the survey are partially credited to the government’s new business investment incentive scheme, the ‘Super Deduction’, which launched just after the last quarter. Figures are revealing a 12% increase in investment over the next 12 months.
It is expected that investment figures will continue to rise while this incentive is active, but the survey further credits rising confidence within businesses encouraging higher investment spends.
In looking at business size as a factor, the survey notes that small businesses with a turnover between £0-9 million are not reporting as higher balance figures as those in the larger categories, particularly in investment where smaller companies are reporting 3% and those in the £25 million+ group reporting 39%. However, looking at employment, in the coming quarter figures for employment appear to be a lot more balanced across all businesses.
Prices and Margins
Looking at the prices and margins, the survey states that same effects reported previously continue to impact UK manufacturers following the nation’s exit from the EU.
The latest data reports that on average UK prices have risen for a balance of 36% of manufacturers, whilst export prices have risen for a balance of 31% of manufacturers over the last three months.
UK Economy Confidence
The survey has revealed that manufacturers opinion on the UK economy confidence has improved by 1.1 points, now sitting as just over 7. With last quarter turning positives for the first time since the pandemic began, many manufacturers have indicated that they feel confident about their own prospects as well as of those around them.
MakeUK’S Manufacturing Outlook on Quarter 2 can be found here.
