South East: Manufacturers positive despite political uncertainty

South East manufacturers are continuing to enjoy positive trading conditions despite the political uncertainty at home and difficult trading conditions in major markets overseas, according to a survey.

According to the Q4 Manufacturing Outlook survey published by Make UK, the manufacturers’ organisation, and business advisory firm BDO LLP, both output and total orders in the region remained very healthy at +26% and +21% respectively, the latter being the highest in the UK.

The improvement in total orders comes on the back of an improvement in both UK and overseas orders which can’t be explained by stockpiling ahead of the October Brexit deadline. UK orders increased to a balance of +30% whilst export orders improved to a balance of +39% with both these indicators bucking the national trend.

This positive picture comes on the back of the continued growth in automation-related technologies in which the South East has a high exposure. As a result of this positive picture both investment and recruitment intentions improved with employment prospects being the most improved of any UK region since Q3.

Despite the positive picture in the last quarter trading conditions are likely to remain very mixed for some time overall. As such, Make UK is now forecasting manufacturing growth of just 0.1% in 2019 and downgraded to 0.3% in 2020 (down from 0.6%). GDP is forecast at 1.3% in 2019 and 1.4% in 2020.

Jim Davison, region director at Make UK in the South of England, said: “Uncertainties about the outcome of Brexit and the impending general election continue to weigh on the UK manufacturing sector but the build up to Christmas has brought a much needed boost.

“Christmas, and the end of the year, are a time when people reflect on the past and try to begin afresh. Manufacturers will hope that the results from this quarters’ survey are a sign that the economy is beginning to grow afresh once more.”

Arbinder Chatwal, head of manufacturing at BDO in Southampton, said: “Investment levels in the South East are bucking the national trend despite a series of declines UK-wide since the start of the year. While this is good news, and possibly a sign that the prospect of a no-deal Brexit is less of a short-term worry, manufacturers still face challenging times. Only when the uncertainty over the direction of travel on Brexit has ended will manufacturers really turn on the taps of much needed investment to boost their productivity performance.”