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UK manufacturers faced a mixed start to the second half of 2024, according to the quarterly Make UK/BDO Manufacturing Outlook survey released on Monday. The survey highlighted a decline in domestic orders while export performance remained strong.
Factory output fell to a balance of -2% in the third quarter, reversing the +9% recorded in the second quarter. This marks the first time production has contracted since late 2020. The drop in domestic orders was notable, with a balance of -4%, indicating weaker demand within the UK.
In contrast, export orders showed a robust performance, rising to +11%. This increase was driven by strong demand from the EU, as manufacturers continued to invest in plant, machinery, and electronic goods.
Despite the decline in domestic production, confidence within the sector remains high. The sentiment index climbed to 7.1 from 6.9 in the previous quarter. Analysts project a significant rebound in output, forecasting an expected balance of +33% for the upcoming quarter.
BDO commented that the period of "extraordinary turbulence" experienced in recent years seems to have stabilized. Although output metrics did not show significant growth in the initial quarters of the year, consecutive positive quarters and steady market demand have led to cautious optimism about sustained growth.
The survey indicated that the UK market has experienced minimal significant economic shocks over the past eight months, contributing to a positive business confidence index. This stability is reflected in the sector's overall outlook, which remains robust despite the mixed performance in domestic orders.
In summary, while domestic orders have weakened, the strong export performance and high confidence levels suggest a balanced outlook for the UK manufacturing sector in the near term.
