Manufacturing Sector ‘Locked in a Nosedive’

The UK’s manufacturing sector continues to be in stuck in a “nosedive” position as companies in the sector attempt to cope with a global slowdown and Brexit-related uncertainties.

According to a survey by the manufacturers’ trade body Make UK, all indicators point to difficulties in the sector and a “harsh” outlook for the short-term future.

Investment intentions and domestic orders have both turned negative among manufacturers recently, while the decline in recruitment rates has also continued across the sector and throughout the country.

Export orders are also in decline, despite the weakening pound making imports from UK companies more affordable for overseas buyers.

In fact, the latest figures suggest that non-British purchasers are buying UK-made goods at a slower pace now than they were a year ago despite the equivalent costs involved having effectively fallen by around 6 per cent. 

Make UK describes the manufacturing sector as experiencing a perfect storm of factors thanks to uncertainty around Brexit, the international trade war that’s been going on and the economic slowdowns seen in major markets.

The organisation is concerned that a No Deal Brexit could soon make matters still worse for its members, although the feeling is that back to back quarters of contraction are now very likely.

“In normal circumstances a global slowdown on its own would be enough, but add trade wars and the biggest shock to our economy since the war and there seems little doubt that, barring a remarkable turnaround, the sector may be heading for recession,” said Make UK’s chief economist Seamus Nevin.

“A cliff-edge decision on a deal or No Deal Brexit will mean a double whammy of continuing weaker demand for products and fundamental disruption to supply chains,” noted Tom Lawton, head of manufacturing at BDO, which worked with Make UK on its data gathering.

“The impact on supply chains will be particularly felt in the UK automotive sector where car parts are sourced from different European countries and delivered on a just in time basis before being finally assembled in the UK,” Mr Lawton added.

Earlier this week, the UK Service Purchasing Managers’ Index from IHS/Makrit and the CIPS showed that growth is slowing among service sector companies across the country, who currently account for most of Britain’s economic activity.