Having seen a brutal 10 per cent decline in output in 2020, the manufacturing sector is now set to recover a significant amount of that loss in 2021, with forecasts suggesting it will have recovered the total loss from last year by the end of 2022.
However, Make UK warned that the supply chain disruption and some labour shortages could hamper this improving picture in the final quarter of the year.
The manufacturing champion said that both UK orders and total orders were very strong for Yorkshire and Humber companies.
The total order balance of plus 73 per cent was the highest of any UK region and very strong by historical standards. This ensured that output remained robust, at plus 60 per cent, recording the second highest balance of any UK region.
As a result of the strong growth prospects and increased business confidence, which is above the UK average, investment intentions have also increased substantially while recruitment intentions remain robust as companies hire to meet demand.
According to Make UK, demand has been boosted by the opening up of the hospitality sector, given the strength of the food and drink sector in the region, as well as demand for steel, given the level of investment in infrastructure and construction projects.
Make UK is now forecasting growth for the sector of plus 7.1 per cent in 2021, tailing off slightly to plus 4.4 per cent in 2022. However, should these be met it will ensure the sector has recovered all the lost output from 2020.
June Smith, region director for Make UK in the North, said: “Yorkshire and Humber companies are seeing buoyant growth conditions as prospects continue to accelerate for manufacturers as economies at home and abroad continue to open up.
"However, supply chain shortages and the rapidly escalating increase in shipping costs are threatening put roadblocks on the road to faster growth despite the current optimism.”
Steve Talbot, head of manufacturing for BDO in Yorkshire and Humber, said: “Manufacturers have proved their resilience over and over again, but we know big challenges remain that will continue to stress-test Yorkshire and Humber makers for the remainder of the year.
“However, such impressive order and output balances are having a hugely positive impact on investment and employment intentions.
"The investment boost we have witnessed is indicative of an industry that is confident of a future worth investing in.”