Yorkshire’s manufacturing output on the rise again

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Manufacturing output in Yorkshire is on the rise again with bosses expecting the surge to persist for the rest of the year.

The strong level of output has been large attributed to an excellent performance across the metal industry, with the region’s output balance having risen to 43 per cent, up from 39 per cent last quarter.

The data comes from EEF, the manufacturers’ organisation and accountancy and business advisory firm BDO, and shows that while domestic orders remain flat, exports outperform domestic demand in line with the national trend.

The last three months saw exports balance rise from 16 per cent to 20 per cent while total orders balance rose to 29 per cent.

Employment levels across the region continued to ease but “still remains healthy” according to the EEF.

However the balance of companies increasing investment has more than halved, down from 28 per cent to 12 per cent, reflecting uncertainty around Brexit and the negotiations.

Looking ahead, confidence about firm level prospects is proving to be more durable than might have been expected, the EEF said.

However it added that the threat of escalating trade tensions and heightened concerns about a Brexit outcome that fails to deliver frictionless trade could quickly make trading conditions more difficult.

Moreover, with the recovery in investment intentions unevenly spread across manufacturing sectors, it said it was cautious about the sector closing the productivity gap with competitors.

Its central expectations is that manufacturing growth is still on the cards this year and next, but risks to that outlook are increasingly present.

The EEF has downgraded its manufacturing forecasts, and is now predicting growth of 0.9 per cent in 2018 and 0.5 per cent in 2019.

EEF Director of Member Engagement for the North, Richard Halstead, said: “There are both reasons for cheer and caution in our latest survey. UK manufacturers in many industries are continuing to benefit from growth in the global economy; expanding their exports and driving ahead with new investments.

“But this is not an industry-wide phenomenon. Trade tensions, the Brexit debate reaching a crescendo and some wobbles in confidence about the UK’s economic outlook continue to make their presence felt across a number of manufacturing sectors.

“If these sources of uncertainty prove to be short-lived then growth across manufacturing looks like more of a sure thing next year.

“If not, then government will need to act to prevent investment plans from faltering.”

Steve Talbot, Partner and Head of Manufacturing at BDO in Yorkshire and Humber, said: “Despite ongoing uncertainty, manufacturers in Yorkshire and Humber continue to demonstrate resilience and confidence in at least the short term future thanks to strong output and global demand.

“The Government cannot afford to ignore the importance of UK manufacturing as we endure the twists and turns of EU negotiations and must minimise disruption to the sector by ensuring that Britain remains open for business with the EU as well as other key international markets.”

The survey covered 360 companies from 1 to 22 August 2018

Lee Hopley of the EEF said: “UK manufacturers in many industries are continuing to benefit from growth in the global economy; expanding their exports and driving ahead with new investments, but this is not an industry-wide phenomenon.

“Trade tensions, the Brexit debate reaching a crescendo and some wobbles in confidence about the UK’s economic outlook continue to make their presence felt across a number of manufacturing sectors.”