Manufacturing forecasts upgraded as sector is buoyed by global growth and "surge" in second quarter performance

Francesca Washtell
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The manufacturing sector is growing increasingly confident of its prospects in the next year (Source: Getty)

Britain's manufacturing sector shrugged off Brexit worries and enjoyed a “surge in performance” during the second quarter as an upswing in global growth and the fall in the value of sterling boosted exports.

Demand in European markets was especially buoyant, according to figures from industry bosses’ group the EEF and business advisory firm BDO, with 61 per cent of companies reporting an upturn.

Positive output balances were reported across all sectors.

Read more: UK manufacturing steamed ahead in May

In response to the “continued improvement in economic conditions”, the EEF has revised its forecasts upwards, with manufacturing now expected to expand by 1.3 per cent in 2017 and 0.5 per cent in 2018. This was up from expectations of one per cent and 0.1 per cent growth respectively in the first quarter.

Although growth was expected in the manufacturing industry, as it forms a relatively small part of the economy, the EEF has kept its real GDP growth forecasts unchanged at 1.8 per cent in 2017 and 1.3 per cent next year.

"Our survey marks another quarter of positive news about growth prospects for UK manufacturers," said EEF chief economist Lee Hopley.

Read more: A bad Brexit would just prioritise the City, warns Unite boss

"Industry is reporting that output and orders have continued to head higher in recent months and the recovery in manufacturing globally is a big part of the story. It’s very encouraging that UK manufacturers have positioned themselves to capitalise on the windfall of a competitive pound and resurgent world economy."

While growth and confidence hasn’t been knocked off track by the snap election, it is not plain sailing from here. There is the continuing challenge of managing input cost increases; ensuring success in attracting and retaining the skills that are in increasing demand and driving up investment in the sector. Whoever forms the next government must set in stone as a matter of urgency a bold industrial strategy that will help cement the foundations for long-term growth for industry.

In May, a survey showed British manufacturing output rose at the fastest pace since the end of 2013 as firms became more confident of further improvements to come.

The balance of firms reporting total order books increased in the month prior jumped to nine per cent, well above the long-term average of a 15 per cent negative balance, according to the Confederation of British Industry.

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