East Midlands manufacturers have seen a weak start to the second half of the year with output and orders turning negative, while recruitment intentions continue to suffer from the increase in National Insurance Contributions.
According to the Make UK/BDO Q3 Manufacturing Outlook survey, output and orders in the third quarter came in at a balance of -6% and -17% while the balance on recruitment intentions was similarly negative at -6%. The one bright spot for the region was an increase in investment intentions, albeit quite weak, to a balance of +6%.
The survey also showed the United States has recovered its position as the second most favoured market for growth prospects, having dropped out of the top three global blocs in Q2 for the first time in the history of the survey in response to tariff uncertainty earlier in the year.
However, the survey also shows that almost three quarters of companies (70%) expect further increases in business tax in the forthcoming Budget at a time when a similar number (68%) have said their costs have already increased more than expected in the last six months. As a result, more than half of companies (58%) have already raised prices this year, while a similar number (53%) intend to do so in the next six months highlighting that inflationary pressures for manufacturers remain in the pipeline.
Looking forward, growth forecasts for the sector remain weak with output still forecast to fall by -0.1% this year and -0.6% in 2026.
Chris Corkan, region director of Make UK in the Midlands, said: “Conditions remain challenging in the face of considerable uncertainty in global markets and this is translating into continued weak trading for East Midlands manufacturers.
“Unfortunately, with UK and European markets in particular remaining anaemic it wouldn’t take much to knock prospects for further growth. It’s therefore essential that Government unlocks every policy in its armoury to try and boost the domestic economy at the very least.”
Chris Cole, head of manufacturing at BDO in the East Midlands, added: “In what has been a relentless year these latest findings are a further concern for the manufacturing sector in the East Midlands.
“The government identified the East Midlands as a region with significant manufacturing growth potential in its Industrial Strategy; as the Budget looms it’s vital the government seizes this opportunity to prove their commitment to the sector and to the promises made for regional growth.”
