Regional Manufacturing Outlook Results July 2016
03-08-2016
However, the manufacturing performance of the South East and London is consistent, majorly for its strong domestic focus to compare relative weakness in the North East. ‘The South East and London has been the biggest drop in confidence, yet retains top spot in the confidence league, due to a strong starting point in early 2016.’
In comparison to all regions in the UK, the South East and London have the highest output. ‘There are 30, 705 manufacturing businesses in the region in 2015, up 2.3% from the previous year.’
In terms of employment, in 2016 there are 409,000 manufacturing jobs in this region, which accounts for 3.9% of the region’s total workforce. Unfortunately, ‘manufacturing employment in the South East and London has seen the biggest decline in the UK, falling by 2.2% between 2010 and 2016.’ In contrast, the production of the South East and London is 121.2% of the UK average, meaning it is the most productive region of the UK, mostly maintained by ‘the presence of high-productivity in manufacturing sectors’. In addition, exports demonstrate to be high, with the South East and London accounting for ‘27% of the UK’s manufactured exports, the largest for any region.’ Beside from Europe, ‘18% of the region’s exports go to Asia and 20% go to North America.’
Manufacturing Performance in the South East and London
‘Local output has grown at a healthy pace for 13 quarters in a row. Orders have been in positive territory in the last three quarters but the main driver has alternated between demand from the UK and demand from abroad. This is a little different from the picture for manufacturing as a whole, where domestic demand has fared a little worse than foreign orders in the last couple of quarters.’
Manufacturers’ expectation previous to the referendum portrayed a steady growth of output and orders in 2016 q3. Furthermore their predictions ‘for recruitment and investment remained healthy.’
Post-Brexit
Overall, ‘the national trend, both domestic and foreign demand has been fairly steady since the referendum.’ Local manufacturers are expected to ‘wait- and see about the future performance of UK and foreign orders than most of their counterparts in other regions.’ Despite the reluctance to analyse UK operations, investment and recruitment, ‘40% expect the referendum to lead them to invest less in the UK over the next 12 months.’ For 65% of the region’s manufacturers the key issue that remains is the instability of the exchange rate. Fortunately, the perspective of 51% is that the weaker sterling is seen as ‘an opportunity’ as ‘the impact of exchange rate movements seems to be finely balanced.’
Jenny Holloway CEO of Fashion Enter states: ‘Whilst the EEF report is showing that there is much anxiety that surrounds the fate of the manufacturing sector especially in terms of exports and exchange rates, there are niches in production which needs fast response quality products. Positively, the garment manufacturing is definitely on the up in London.’
By Shivanee Tailor
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