Manufacturing Outlook 2020 Q1
Britain’s manufacturers are calling on the Government to work with industry and take whatever steps are necessary to mitigate the impact of coronavirus on the back of a survey showing exports have slumped to their lowest level in three years.
Our Q1 Manufacturing Outlook survey published with business advisory firm BDO LLP is the first edition since the UK left the EU and the first to include data for Northern Ireland. Download the full report below.
Taken before the recent escalation of the economic situation across Asia and Europe, the survey confirms that the sector had ground to a standstill at the end of 2019 as the stockpiles from a potential October EU exit wound down. And, while the domestic picture had begun to improve slightly, exports had already fallen sharply in response to a downturn in world trade, a situation likely to be exacerbated by current events.
Key findings
- Output fell sharply on back of weak orders and Autumn stockpiles wound down
- Domestic orders improve but still negative, worst run since 2015
- Export orders turn negative for first time since Q4 2016
- Evidence EU customer sentiment turning away from UK
- Electronics turns negative for first time since 2015 as access to semi-conductors and other components dry up
- Northern Ireland least optimistic area of the UK
- Manufacturing forecast to contract in 2020 by -2.1%
After the rollercoaster ride of the last twelve months and a series of stockpiling highs and investment lows the election result had at least provided some degree of political certainty and a prospect of a return to cyclical economic normality, but the escalation of coronavirus is likely to knock that off course.
Even before the current situation the shocking drop in exports could not have come at a worse time ahead of potentially difficult trade talks where the clock is running down fast. It is now vital that Government works with industry to limit the damage to industry and take whatever steps are necessary to safeguard skills in particular.
As coronavirus fears take hold and the impact on the sector’s crucial supply chains remains largely unknown, businesses should be preparing themselves for more volatility this year.
The dramatic fall in exports only exacerbates the challenges to come. There is no doubt that the sector needs the Government to step up and deliver a clear and supportive industrial strategy to help navigate the choppy waters ahead.
About BDO LLP
Accountancy and business advisory firm BDO LLP is the UK member firm of BDO International, which has more than 1,800 offices in 167 countries. We operate from 17 offices across the UK, employing 5,150 people offering tax, audit and assurance, and a range of advisory services.
Manufacturing is a priority sector for BDO and this focus enables us to tailor the wide range of services we offer and apply our skills and knowledge to help clients achieve their objectives.
We provide real solutions to industry issues, utilising our capabilities in everything from sector-specific tax, audit and business advice to patent box, research and development claims and acquisition opportunities to help our clients grow in the UK and overseas.
We have an excellent understanding of the issues affecting UK manufacturers as an industry sector, but we also focus on specific sub-sectors to improve our knowledge and our service to clients. These include: aerospace, automotive, building products, chemicals and pharmaceuticals, electrical, food and drink, industrials, technology and test and measurement.
Manufacturing remains one of the key industries of the UK economy. We are delighted to be able to play an active role in supporting the businesses that operate in this vibrant, changing and challenging sector.