CBI and EEF reports reveal upturn in UK manufacturing performance

The CBI’s quarterly industrial trends survey of nearly 400 respondents stated that production for the three month period to July had grown at the fastest pace since 1995.

It also revealed that employee headcount increased for the greatest rate for the last three years.

Expectations for a growth in domestic orders are high and significantly those for export orders are at their greatest in four decades.

Alongside this, UK firms have accumulated raw materials at their fastest pace for 40 years, mirroring the expectation of increased demand.

CBI chief economist Rain Newton-Smith, said: “Output growth among UK manufacturers is the highest we’ve seen since the mid 1990s, prompting the strongest hiring spree we’ve seen in the last three years. Cost pressures are easing and firms are upbeat about the outlook for export orders. 

“It’s great to see the benefits from the decline in sterling for UK exporters feeding through. But the flipside is the broader hit to consumer spending power across the economy from stronger inflation, which is likely to have fuelled the slowdown in the economy in Q1 and is expected to pull down growth in Q2.”

The EEF’s third annual Regional Manufacturing Outlook report, published in partnership with accountancy firm BDO LLP, also points to an improved picture overall.

Performance in the east and west midlands areas has been particularly strong with general uplift over the last two quarters, suggests the report.

“Stronger growth globally is helping to lift sentiment and activity across the majority of the UK,” said the organisation in its official statement.

“And this trend is notable in most parts of the country north of the Watford Gap since last year’s EU referendum, with confidence about business performance in the 12 months ahead mounting a healthy recovery.”

However, one business leader warned that, despite encouraging results, UK manufacturing had key structural challenges to address.

Martin Walder, VP Industry at Schneider Electric, commented: “The need to create a smarter more efficient industrial environment must still remain a priority.

“Costs continue to rise, vital engineering expertise is retiring out of the workforce, and existing automation control systems are slowly becoming obsolete and failing to deliver on the promise of the smart future the industry so desperately needs.

“To resolve these ongoing challenges, continued efforts around education and investment in technology is critical to help UK manufacturing compete with other major economies which have far exceeded our adoption of robotics and autonomous systems thus far.”