Recession fears ease in manufacturing but growth remains elusive
Fears of a recession in the manufacturing industry have eased slightly, but significant growth remains elusive, according to a new report.
Companies are seeing a rebound in activity in the first quarter of the year as domestic and global markets improved, said a report by Make UK and business advisory firm BDO. Their research suggested the improvement was being largely driven by strong demand in the electronics and mechanical equipment sectors, as opposed to sectors including fashion or textiles.
This could be due attributed to companies investing in digitalisation and extra capacity to counter labour shortages, whilst demand for electronics goods was said to be especially strong from overseas, especially the EU.
Make UK and BDO cautioned against the worst of the conditions being over and are forecasting a contraction for manufacturing in 2023 as the substantial challenges the sector is facing show few signs of abating.
Fhaheen Khan, Senior Economist at Make UK, said: “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.”
This improvement is in stark contrast to figures reported in January 2023. Previous data said that the UK’s manufacturing sector ended 2022 with its worst month for over two and a half years. The companies saw falls in output, numbers of new orders received and stocks, while prices continued to rise, although at a slower rate than before.
Exporters reported overall low demand from China, the US, mainland Europe and Ireland, largely due to weak economic conditions around the world. Some companies also mentioned shipping delays, higher costs and other issues all linked to Brexit.