North West manufacturers outlook hampered by lack of industrial strategy as outlook ‘gradually’ improves

The lack of an industrial strategy from central government is hampering anything more than a gradual recovery, according to the director for the North of manufacturing trade body Make UK.

The findings in the Make UK/BDO Q2 Manufacturing Outlook survey show strong demand for major new aircraft orders have boosted the aerospace sector, and an easing of chip shortages have helped automotive supply chains.

Dawn Huntrod

However, Dawn Huntrod, Regional Director for the North at Make UK, said: “Manufacturers in the North West 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 and so long as there is an absence of an overarching industrial strategy growth prospects will remain anaemic at best.”

North West manufacturers are seeing an improving economic outlook for the rest of the year as the domestic and global markets have improved, easing fears of a significant recession for industry this year.

Both output and orders are forecast to increase significantly in the next quarter to a balance of +17% and +22% respectively, figures that are substantially above long-term historic averages. Both UK and export orders are strong at a balance of +11% and 25% respectively In line with this improving picture job prospects are improving with the balance of companies increasing recruitment in the last three months above the national average at +17%.

In terms of overall output this year Make UK and accountancy firm BDO are forecasting a contraction of 0.3% although this is a significant improvement from the contraction of -3.3% made in Q1 and the -4.4% forecast at the end of last year. However, Make UK is maintaining its previous forecast for growth of just 0.8% in 2024. UK GDP growth is at 0.4% for 2023 and 1.3% for 2024.

Graham Ellis, Head of Manufacturing at BDO in the North West, said: “Despite the first half of the year seeing some pressures easing for local manufacturers, there are longer-term systemic challenges in the UK market, with built-in inefficiencies that need to be addressed urgently in order for manufacturers to effectively plan and invest.

“Supply chain pressures, for example, are an endemic issue for the businesses we talk to, particularly medium-sized firms. These issues cannot be overlooked by policymakers or we run the risk of tepid-at-best growth for UK manufacturing for many years to come.”