Confidence among manufacturers on the up despite current anaemic growth

Manufacturing growth in the UK continues to be anaemic but a majority of businesses believe the change of government will lead to better growth in the next 12 months.

That's according to the Q3 Manufacturing Outlook survey published today (Monday) by Make UK and business advisory firm BDO, which surveyed 307 companies between July 25 and August 21.

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Fhaheen Khan, senior economist at trade body Make UK, said: "This quarter presents a tale of two halves with output turning negative and recruitment taking a dip, yet investment remains positive and business confidence continues to climb.

"With an Autumn Budget and Spending Review fast approaching, now is the time for Government to pick up the pace and deliver on pre-election promises, most notably the publication of a long-term robust Industrial Strategy."

Output decreased from plus 9% in the second quarter to negative 2% this and is forecast to jump to plus 33% in the next quarter.

Total manufacturing orders are following a similar pattern, decreasing from plus 14% in Q2 to plus 7% and then also jumping to plus 33% in the next three months.

Recruitment intentions also turned negative for the first time in four quarters decreasing from plus 26% to minus 1% although intentions are forecast to jump in the next three months to plus 22%.

The survey also showed that almost six in ten, or 58% of companies, believe the change in Government will lead to better economic growth overall in the next 12 months.

Make UK has upgraded its forecast for the economy overall in 2025 from 0.8% to 1.8%.

Richard Austin, head of manufacturing at BDO, said: "Manufacturers are hopeful that a period of greater political stability will provide a better economic outlook ahead, and that in turn is boosting business confidence.

"Time will tell if that confidence can translate to improved output and orders next quarter, but there’s a growing sense of hope that a rising tide can lift all boats.

"All eyes are on the Government’s next steps. We need an industrial strategy that is fit for purpose to ensure that the confidence firms currently have in future economic prospects is not misplaced."

Make UK suggests the government should also use the Budget to bringing forward the UK CBAM (Carbon Border Adjustment Mechanism) to 2026, review and uplift apprenticeship funding bands, and make greater commitment to more long-term, large scale infrastructure projects.