The West Midlands manufacturing sector saw strong output growth in the quarter to July, after a decline in the previous quarter with this rate of growth far surpassing the UK as a whole (+6%). That’s according to the CBI/Accenture Quarterly Industrial Trends Survey.
The pace of growth in new orders in the West Midlands was broadly similar to last quarter in the West Midlands, also comfortably above the UK average, by 11 per cent in the quarter to July.
The UK as a whole saw a slowing down in manufacturing output and orders growth to more typical rates of expansion following a period of exceptionally strong growth over the previous year.
Average costs and prices continued to rise sharply across the country, with the West Midlands seeing a greater increase in export prices (+53 per cent) than the UK average (+32 per cent). However, it is expected that this divergence will close next quarter, with export prices growth easing slightly for West Midlands manufacturers.
Across the country, average cost growth is expected to ease slightly next quarter, with prices expected to rise at a similar pace as in the quarter to July.
Optimism within the sector in the UK fell for a third consecutive quarter, with the West Midlands experiencing a similar decline in sentiment as the UK average. However, while investment intentions generally improved in the UK, investment intentions across the West Midlands in buildings (-26% from 0% in April) and plant and machinery (-19% from -2%) worsened and were well below the national averages (-7% & +17%).
In more positive news for the region, employment within the sector continued to grow at a robust pace ( up 16 per cent), with data showing the West Midlands kept up with the national average (18 per cent).
Across the UK, concerns over shortages of labour, and components and materials remained acute.
Paul Stanley, Midlands Lead for Accenture, said: “Despite facing challenging circumstances, the region bucks the trend in manufacturing output and has shown its resilience to increasing inflationary pressures.
“The West Midlands is fast-becoming a world-class technology and digital engineering hub. Businesses must continue to invest in the right technology and people in order to maintain this positive trend and ensure the West Midlands remains a crucial part of the UK economy.”
Anna Leach, CBI Deputy Chief Economist, said: “The manufacturing sector has been a relative bright-spot in our economic surveys over recent months, but with output and orders now softening, conditions are becoming more uncertain for a sector already being buffeted by high cost inflation and ongoing supply challenges.
“It is encouraging, however, to see investment intentions firming. Stronger investment will be vital if the UK is to reinvigorate growth and keep recession at bay. The new prime minister will need act quickly to fan the flames of these ambitions by announcing a permanent successor to the Super Deduction and urgently reforming an outdated business rates system that currently acts as a tax on investment.”
Nationwide, the survey, based on the responses of 237 manufacturing firms, found:
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