UK manufacturing sector sees output jump - Make UK

The UK manufacturing sector saw output surge in the fourth quarter, an industry survey showed on Monday, outpacing orders.

The output balance in the latest Manufacturing Outlook survey from BDO and Make UK, the trade body, increased to 20 from just 3 in the third quarter.

Sentiment also improved, with respondents expecting output to remain at a similar level in the first three months of 2024, with a balance of 15.

Total orders also strengthened, but at a slower pace, rising to 7 from a negative balance of -1 in the third quarter.

Make UK said output increasing by almost three times the rate of orders was "highly unusual", and could be indicative of stockpiling or restocking ahead of next year.

The last time output outstripped orders to this level was in 2019, when companies stockpiled on fears the UK would leave the European Union without a deal.

Export orders increased to 10, from -3. UK orders remained unchanged at 0. It is the first time export orders have exceeded UK ones since before the pandemic, in the fourth quarter of 2019.

Recruitment plans also strengthened, with the hiring intentions balance rising to 6 from -1 in the third quarter.

Fhaheen Khan, senior economist at Make UK, said: "After the economic and political shocks of the last few years there is some semblance of stability returning for manufacturers.

"While growth is not exactly supercharged, the positive announcements in the Autumn Statement can at least allow them to plan with more certainty."

Last month chancellor Jeremy Hunt announced plans to make so-called full expensing permanent.

Introduced as a temporary measure in 2021, full expensing allows companies to reduce their tax bill by up to 25p for £1 they spend on plant and machinery. Industry groups had lobbied to keep the tax break.

Richard Austin, head of manufacturing at BDO, said: "Firms are ending the year on a relatively stable footing with some certainty at least in the tax environment to support their long-term investments in the UK.

"The hope now is that the sector can pick up the baton and drive growth."

The survey of 303 companies was carried out between 25 October and 29 November.