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Britain’s manufacturers are seeing a rebound in activity in the first quarter of the year as the domestic and global markets have improved, easing fears of a significant recession this year.

The latest Make UK/BDO Q1 Manufacturing Outlook survey shows a marked pick-up on the picture in the final quarter of 2022. The figures echo the gradual improvements in other data such as the UK and European PMIs which are now only just in negative territory, as well as a strong pick up in demand from China.

Most notably, the improvement is driven by strong demand in the electronics and mechanical equipment sectors, with the balance of orders in the electronics sector extremely strong. 

This could be due to several factors, including companies investing in digitalisation and extra capacity to counter labour shortages or, to take advantage of the final period of the super deduction scheme before it ends this month. Demand for electronics goods is especially strong from overseas, in particular the EU.

Also, with this edition of Manufacturing Outlook, we are now in the 9th consecutive quarter of elevated price metrics, where manufacturers have consistently raised both their UK prices and Export prices far beyond the norm quarter-to-quarter since the first quarter of 2021. The change this quarter, encouragingly, is that the rate of margin decline has slowed with an expectation for margins to return to positivity by the second quarter of this year.

Manufacturers have seen a rebound at the start of the year as conditions have improved in their major markets and, business confidence has improved. However, one swallow doesn’t make a summer and it is far too early to say the worst has passed given the significant challenges the economy faces.
Fhaheen Khan Senior Economist, Make UK
The results of our research with Make UK illuminates that, despite glimmers of good news such as strong demand for electronics and mechanical equipment, inflationary pressures are still very evident for UK manufacturers with increased costs still being passed on. The data shows conflicting upward and downward indicators – potentially an industry at a crossroads. It will be fascinating to see which path will be followed over the coming months.
Richard Austin National Head of Manufacturing, BDO

Available resources

Make UK / Industry report