Manufacturing rate still down, but North West leaders eye some improvement

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Manufacturers in the North West have begun to recover from the worst impact of the pandemic according to a major survey published today by Make UK and business advisory firm BDO.

However, Make UK warned that given the uncertainty surrounding the Brexit negotiations and the very real possibility of ‘no deal’, the combination of that outcome with the continued impact of the pandemic could cause further damage to investment prospects in the latter part of the year.

According to the survey the balances for orders and output in the North West were -29 per cent and -6 per cent respectively. While this is still in negative territory, it represents a significant improvement on the last quarter with the figure for output in particular some way ahead of the national picture.

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While the impact on the aerospace and automotive sectors remains severe, the North West has a significant presence in the pharmaceuticals and chemicals sectors which to date has offset some of the toughest impact of the pandemic.

Manufacturing has been hit hard by the lockdownManufacturing has been hit hard by the lockdown
Manufacturing has been hit hard by the lockdown

In response to the difficult trading environment, the prospects for recruitment and investment are both flat in the region but this also represents a significant improvement on the very negative outlook in the last quarter and a better picture than the national average.

Looking forward, given the impact on the sector Make UK is now forecasting that manufacturing output will fall by 10.9 per cent this year while it has downgraded its forecast for recovery in 2021 by more than a full percentage point from 6.2 per cent to 5.1 per cent. GDP is forecast to fall by -8.5 per cent this year before recovering by +10.1 per cent in 2021.

Commenting, June Smith, region director for Make UK in the North, said: “Manufacturing has begun to climb away from the abyss that it stared into earlier in the year. But, make no mistake it is going to be a long haul back towards normal trading conditions, with talk of a V-shaped recovery nothing more than fanciful.

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“Having emerged from three years of political uncertainty at the end of last year, increasing talk of a final ‘no deal’ exit from the EU would be a final nail in the coffin for many companies. If we are to avoid this and, the avalanche of job losses that would follow in already hard hit areas and sectors, it is essential that the first step towards a fuller recovery is provided by a comprehensive trade agreement with the EU.”

Graham Ellis, Head of Manufacturing at BDO in the North West said: ‘While the manufacturing industry has managed to claw back some lost ground from a dismal Q2, the subdued level of investment intentions across the region is a real cause for concern.

"With a no deal exit from the EU - and associated logistics, customs and cost implications - looking increasingly likely, British manufacturers will need to step up a gear in order to compete internationally, and this will require significant investment in productivity and digitalisation improvements."

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