UK Manufacturing Bulletin February 2018
Listed Under: News & Bulletins
UK Manufacturing Bulletin Q1 2018
Welcome to our Q1 2018 UK Manufacturing Bulletin.
Our latest update indicates continued demand for key skills and reinforcement of the recognised skills shortage within UK Manufacturing. UK Manufacturing output has expanded at its fastest rate since early 2008 after recording a seventh consecutive month of growth in November 2017.
Here we highlight some of the key economic statistics and trends leading commentators are predicting.
If you are looking to recruit experienced manufacturing staff to enable you to exploit new or existing markets within the UK, Germany, Europe or further afield, please call us for a no-obligation discussion.
Economic Commentary – What the Experts are saying:
A joint EEF/AIG survey has shown Britain’s manufacturers are more upbeat about the state of the global economy than at any time since 2014 and believe demand from overseas will sustain their businesses through another year of Brexit uncertainty. 40% of the companies questioned are planning for growth in 2018 while 19% were expecting a downturn in their business.
The UK economy has exceeded expectations for its performance at the end of last year, prompting a leading economic thinktank to upgrade its growth estimate for 2017. GDP grew by 0.6pc in the final quarter of last year, an improvement on its previous forecast of 0.5pc. Based on this estimate, the UK economy expanded by 1.8pc in 2017. This upward revision followed official data showing that manufacturing picked up pace and the gap between imports and exports narrowed towards the end of 2017.
Industrial production - a measure of output from manufacturing, energy and mining industries - grew by 1.2pc in the three months to November. Growth was largely driven by manufacturing, which expanded by 0.4pc in November. The three-month average showed the best performance for the sector in nearly a decade, with output 3.9pc higher than in the same three months of 2016. It was the first time since 1997 that output from the sector had increased for seven consecutive months.
Renewable energy projects, boats, aeroplanes and cars for export helped make output 3.9% higher in the three months to November than in 2016.
Construction output in the three months to November fell by 2%, compared with the previous three months. This is the industry's biggest quarterly fall since August 2012, with the only bright spot for the sector being a 1.2% increase in new housing.
The Markit/Cips UK manufacturing PMI barometer of factory sentiment showed an average of 57 in the three months to December, in the strongest reading since the three months to June 2014. While the gauge dipped to 56.3 last month from 58.2 in November, it remained firmly above the 50-level indicating expansion.
While the manufacturing figures are good, it is important to note that the sector only makes up roughly 10% of the economy.
Britain recorded an increase in exports to non-EU countries at a faster pace than to EU markets in the three months to October, according to the most recent data from the Office for National Statistics (ONS). Earlier months this year showed falling sales to the rest of the world, against robust growth to the EU.
Between June to August 2017 and September to November 2017, the number of people in work increased. There were 32.21 million people in work, 102,000 more than for June to August 2017 and 415,000 more than for a year earlier.
The employment rate (the proportion of people aged from 16 to 64 who were in work) was 75.3%, higher than for a year earlier (74.5%) and the joint highest since comparable records began in 1971.
As Britain’s factories benefit from an export boom as the weak pound and demand from the strong eurozone economies leave manufacturers with the biggest order books since 1988 just over half plan to increase their headcount, continuing to drive Britain’s jobs resurgence which has taken unemployment down to its lowest level since 1975.
This fall in joblessness combined with a slide in net immigration has left companies worrying that there is a skills shortage which leaves them short of the staff they need.
British households are finding their spending power clipped by rising prices and sluggish wage growth, which is likely to have a knock-on effect for manufacturers. The pound’s weakness since the Brexit vote has led to a surge in the cost of importing food and fuel to the UK, pushing up prices on the high street and leading to a slowdown in spending.
However, the squeeze on British household budgets showed signs of easing in December as the rate of inflation fell for the first time in six months. The consumer price index fell to 3% in December from a five-year high of 3.1% in November and Inflation is forecast to fall towards the Bank of England's 2 percent target over the next year, raising the prospect that inflation may have peaked, easing some of the pressure on UK consumers.
*Compiled from news and research/survey sources in January 2018