West Midlands manufacturers are seeing a mixed picture in the first quarter of the year as the continued struggles of the automotive sector hit the region.
A survey published today by Make UK and business advisory firm BDO shows the brutal impact of the pandemic with the sector overall seeing a drop in output of 10% nationally last year. However, reflecting the more positive picture as the year progresses Make UK has upgraded its growth forecasts for the sector for 2021.
According to the survey, output in the West Midlands improved from the end of last year but remains marginally negative at a balance of -4%. A similar marginally negative picture is shown for both UK and export orders, reflecting the downturn in output seen by the Automotive sector over the last year which has rippled down through the supply chain in the region.
East Midlands manufacturers are beginning to move through the gears towards growth from the historic lows experienced last year, outperforming other UK regions in the process.
That’s according to a survey published today by Make UK and business advisory firm BDO. However, the survey also shows the brutal impact of the pandemic with the sector overall seeing a drop in output of 10% nationally last year.
But given the more positive picture Make UK has upgraded its growth forecasts for the sector for 2021.
According to the survey, output in the East Midlands increased significantly to a balance of +36%, the highest of any UK region, possibly due to the region’s important food and drink sector which is performing well nationally.
The combined output of the region’s manufacturing and service sectors returned to expansion territory in February after signalling a sharp contraction at the start of the year.
Rising from 41.5 to 51.1, the latest reading was consistent with only a slight recovery in activity following the lockdown-induced downturn in January.
According to the NatWest West Midlands PMI Business Activity Index, where growth was reported, it was attributed to the clearing of backlogs, projects in the pipeline and reduced uncertainty.
After contracting sharply at the start of 2021, new work intakes at West Midlands companies fell only marginally in February. This was indicated by the respective seasonally adjusted index moving closer to the critical 50.0 threshold. Some firms suggested that the national lockdown restricted sales at their units, but others indicated that a reduction in uncertainty, restocking efforts among clients and online shopping underpinned demand growth.
The upturn of the UK manufacturing sector was constrained by supply-chain disruption and rising cost pressure in February, keeping output growth only marginal despite a modest improvement in new order intakes. Survey data were collected 11-23 February.
The seasonally adjusted IHS Markit/CIPS Purchasing Managers’ Index® (PMI®) rose to 55.1 in February, up from 54.1 in January and above the flash estimate of 54.9. The PMI has signalled growth for nine months in a row.
Output rose at the weakest pace during the current nine-month sequence of increase. New orders expanded following a slight decrease in January, as domestic demand improved and new export business inched higher.
Companies reported improved demand from several markets – including the US, Asia, Scandinavia and (in a few cases) mainland Europe – but noted that the ongoing impact of COVID-19, Brexit complications and shipping difficulties also constrained export order growth.