Manufacturing will rebound to pre pandemic levels of production by the end of 2022, predicts Make UK in its latest annual Regional Manufacturing Outlook survey. The four quarters surveyed were typified by two quarters of struggle against the background of the Covid-19 pandemic, one quarter when there was a transition to recovery and a final quarter that saw ‘explosive improvements in manufacturing performance’.
Analysis of manufacturing performance from the start of Q3 2020 shows the ‘brutal impact’ of the pandemic on the sector with approximately Åí18bn output in value lost between 2019 and 2020. However, Make UK has upgraded its manufacturing growth forecast for 2021 from +3.9% to +7.8%, so manufacturing should recover all lost output by the end of 2022, six to nine months earlier than expected.
The survey, published jointly with business advisers BDO, says the manufacturing industry across the UK has endured extreme volatility, with the best and worst ever balance figures in the 30 year history of the survey being seen in the space of only five quarters. Most regions and nations in the UK report an increase in their average business confidence compared to last year.
The survey reveals some ‘standout performances’ by regions even though there was only one positive quarter in the research period. The West Midlands has been the top performer at maintaining output levels on average in the second half of the pandemic, posting a positive balance of 12%. The East Midlands posted the only double-digit balance figure for investment, and also improved its investment outlook the most of any region compared to last year’s survey.
In a joint foreword Make UK Chief Executive Stephen Phipson and BDO Head of Manufacturing Richard Austin praise manufacturers for their response to the pandemic. They say: “The industry remained switched on and kept the gears turning. Automotive manufacturers switched production processes to produce PPE; chemical product manufacturers ramped up production of hand sanitisers and cleaning materials; and the pharmaceuticals industry delivered an effective vaccine at a pace that’s never been achieved before. As difficult as the crisis has been it has shown how resilient and agile UK manufacturers are.”
Make UK says the most recent indicators for 2021 show the manufacturing sector has renewed optimism as the sector bounces back with output rising to record levels, with heightened levels of employment and investment intentions rising, partially boosted by the Government’s super-deduction scheme.
However, when viewed over a twelve-month period the growth achieved in early 2021 is not necessarily enough to recover losses incurred during the second half of 2020. Many regions on balance still reported overall contractions, where on average the declines in industry outweighed its gains within the measured period.
Some locations, like the East of England, South East & London, South West and Scotland, reported average balances that Make UK says leave room for only cautious optimism. Only one region, the North West has produced average positive balances across the board, whereas all other regions or nations have reported an overall contraction on at least one metric.