Make UK/BDO: South East manufacturers enjoy strong end to the year

South East manufacturers have seen a strong performance at the end of the year, according to the latest quarterly Manufacturing Outlook survey from Make UK and business advisory firm BDO.

According to the survey, output in the region reached a balance of +52% which was among the best performance of any UK region and a very strong figure by historical standards.

The figure was buoyed by strong domestic and overseas orders which were both above the national average, and a reflection of world markets which have rebounded very strongly throughout the course of the year.

The South East also continues to benefit from significant demand for electronic-related goods where the region has a strong presence, as well as the opening up of hospitality which has benefitted the food and drink sector.

As a result of this strong performance, the outlook for jobs across the South East has significantly improved as companies hire to meet demand. The employment balance in the region was +33% which is well above the national average, while investment intentions also increased, possibly in response to the Chancellor’s extension of the Annual Investment Allowance in the Autumn Budget.

As with the national picture, the big challenge for companies, in addition to attracting and retaining talent, remains the escalating inflationary pressures that are forcing companies to raise prices, in many cases significantly.

Make UK has forecast growth for manufacturing in 2021 of +6.9%, down slightly from +7.1%, and growth in 2022 of +3.3%.

Jim Davison, Region Director in the South at Make UK, said:

“While manufacturers in the South East will be able to enjoy some festive cheer this year, their spirits will be tempered by the eye watering impact of escalating cost pressures which are leading an increasing number to pass these on to the consumer."

“Given the global nature of some of these pressures there is little sign that they will abate anytime soon. However, they will hope as we enter a fresh year that these will gradually unwind, with the compensation being that demand prospects among their major markets continue to look strong.”

Mark Hutton, Head of Manufacturing at BDO in the South East, said: 

“Manufacturers faced a brutal 10% decline in output in 2020. This year, they have rebounded proudly with some record-breaking figures."

“Cost pressures – input prices, labour, logistics and inflation – are settling in for the long haul and will continue to impact manufacturers, however they can enter 2022 on significantly firmer footing than last year.”