Manufacturers see output surge as global demand recovers

by | Jun 14, 2021

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The UK manufacturing sector saw output surge in the second quarter, a survey published on Monday showed, fuelled by a strong recovery in domestic and international orders.
According to the latest quarterly survey from industry body Make UK and accountants BDO, the balance in output improved from 9% in the first quarter to 36%, the highest in the survey’s 30-year history.

Output is expected to continuing growing in the third quarter, with a forecast balance of +46%, also a record high.

The surge in output was fuelled by significant growth in total orders, which improved to 34% from 9% three months earlier. Domestic orders increased to 27% from 6%, while export orders returned to a positive balance, at 22% compared to the first quarter’s -8%.

 
 

Investment intentions also turned positive for the first time since the beginning of 2020, coming in at 17% compared to -6% three months earlier.

Make UK has upgraded its growth forecast for 2021 on the back of the survey, to 7.8% from 3.9%, with output slated to return to pre-pandemic levels by the end of 2022, dependent on the success of the vaccination programme.

Fhaheen Khan, senior economist at Make UK, said: “Manufacturing growth is now firmly accelerating as restrictions have been eased and economies around the global have started to open up. Looking forward, there seems no reason to believe that this will not continue, assuming the shackles come off firmly in the second half of the year.”

 
 

Recruitment intentions also exceeded expectations in the second quarter, improving from -6% to 20%.

However, Khan sounded a note of caution: “Given we are coming from a very low base, worse than during the financial crisis, we have to bear in mind that there was bound to be a rubber band impact this year.

“Furthermore, for some sectors – such as aerospace – the limited prospects for international travel in the near future means they may struggle to return to normal trading for some time.”

 
 

The survey of 276 companies was conducted between 5 and 26 May.

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