Yorkshire manufacturers perform better than UK, EEF and BDO survey shows

The performance of manufacturers in Yorkshire has remained healthy in the final months of the year despite a cocktail of factors related to Brexit uncertainty, weaker global growth and the impact of protectionist policies, according to a survey.

The Union and EU flag. (AP Photo/Virginia Mayo)

The survey published today by manufacturers’ organisation EEF and business advisory firm BDO found that output rose strongly to a balance of +52 per cent, the highest of any UK region.

Whilst both domestic and export orders rose to +26 per cent, which is well above the average for other UK Regions.

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Business confidence amongst manufacturers also rose, bucking the trend of the national picture.

The national outlook for manufacturers is “deteriorating” amid continued Brexit uncertainty and weaker global growth, according to the EEF/BDO Manufacturing Outlook survey.

The report suggested that exports, which have boosted the sector in recent years, have “hit the brakes”.

A survey of more than 320 companies indicated that investment and employment plans are down.

Europe continues to remain the market with the best prospects for manufacturing companies, said the report.

Richard Halstead, director of member engagement for EEF in the North, said: “The moderation in manufacturing performance over the course of this year was not unexpected but in the final quarter there are more clouds on the horizon than there have been for some time.

“This should come as no surprise given the significant political uncertainty at home which is why it is essential that there is an agreement for the UK’s withdrawal from the EU as soon as possible.

“If everything that can go right does then business and consumer confidence should hopefully gather some steam next year with improved prospects for growth.

“That’s the backdrop we’re working to, let’s hope it’s the right one.”

Steve Talbot, partner and head of manufacturing at BDO in Yorkshire, said: “Yorkshire manufacturers have remained reasonably confident over the course of the year and are ending the year on a strong footing, however they are facing strong headwinds as we enter 2019.

“UK-wide, there has been a sharp decline in export orders in the final quarter and Yorkshire manufacturers are likely to see that as cause for concern.”

UK private sector activity was unchanged in the quarter to November, according to the latest CBI Growth Indicator.

The composite measure, based on 663 respondents across the distribution, manufacturing and service sectors, showed the balance of firms reporting a rise in output at +2 per cent, down from +10 per cent in the three months to October.

The slowdown in private sector activity growth was driven by weaker performances in services and distribution. Meanwhile, manufacturing growth picked up slightly, the Growth Indicator showed.

Looking ahead, private sector activity is expected to remain steady over the three months to February at +3 per cent, with slower growth in manufacturing and falling volumes in services, partially offset by stronger growth in distribution.

Rain Newton-Smith, chief economist at CBI, said: “Private sector activity seems relatively stable as we head towards the end of the year. Businesses expect little change over the quarter ahead.

“The various papers which have been published in the last seven days lay bare the potential costs of a no deal Brexit, which would hit jobs and livelihoods across the country.

“While the current deal on offer is not perfect, businesses need the assurance that they won’t face a cliff-edge break with the EU in four months’ time in order to create new jobs and invest further in the UK.”

Manufacturers hope meaningful vote will provide some EU clarity

Manufacturers are hoping that a meaningful vote on Brexit, due next week ahead of an EU summit, will provide some clarity heading into the new year. According to the report, Europe continues to remain the market with the best prospects for manufacturing.

Steve Talbot, partner and head of manufacturing at BDO in Yorkshire, said: “Overseas demand has helped sustain manufacturing growth over the last few years and the EU remains the most important trading block for manufacturers. It is crucial that we are seen to be open for business with the EU and other key global markets. The result of the ‘meaningful vote’ next week will dictate the government’s next steps and hopefully provide some much needed certainty as we enter the new year.”