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Britain’s manufacturers continue to grow at a stable rate in the second quarter of the year, easing fears of a significant recession for the sector. 

The latest Make UK/BDO Q2 Manufacturing Outlook survey shows a continued positive picture with the improvement being driven by strong demand in the ‘Other Transport’ subsector, which includes manufacturers in aerospace, shipping and rail. This strong performance is also observed across ‘Electronics’ subsectors  too due to high demand from Europe, with the balance of output reporting very strong in these industries.  

However, despite conditions remaining positive, Make UK is still forecasting a slight contraction for manufacturing in 2023, although the picture remains far better than the significant contraction Make UK was forecasting at the end of last year and in Q1.

Also, with this edition of Manufacturing Outlook, we are now in the 10th 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 is that the rate at which the prices are increasing has slowed on balance at its fastest rate yet, giving the strongest indication that inflation may be easing at the production level.

Manufacturers are seeing a gradually improving picture but the word ‘gradually’ is doing a lot of heavy lifting. However, companies are at least seeing a relative period of stability after the political and economic turmoil of the last few years when they have spent most of their time firefighting. Substantial challenges still remain, however, and so long as there is an absence of an overarching industrial strategy growth prospects will remain anaemic at best.
James Broughham Senior Economist at Make UK
Despite the first half of the year seeing some pressures easing, there are longer-term systemic challenges in the UK market, with built-in inefficiencies that need to be addressed urgently in order for UK manufacturing to effectively plan and invest.

Supply chain pressures, for example, are an endemic issue for the businesses we talk to, particularly medium-sized firms. They are facing continued disruption and increased costs, at home and abroad, with many choosing to onshore operations but facing major barriers in doing so. These issues cannot be overlooked by policymakers or we run the risk of tepid-at-best growth for UK manufacturing while neighbouring countries outpace us.
Richard Austin National Head of Manufacturing, BDO

Available resources

Industry report / Make UK