UK Manufacturers Experiencing a ‘Post-Covid’ Boom
According to the latest quarterly CBI Industrial Trends Survey, output volumes grew at the joint-fastest rate on record during Q2 of 2021. Manufacturers are expecting output to grow at an even quicker pace in Q3 as they take advantage of Chancellor Rishi Sunak’s new tax break – a 2-year super deduction allowing businesses to cut their taxes by 25% for every £1 they invest. Please see below more information from the CBI’s latest summary report in the form of a news bulletin issued by Insider Media today.
Roger Mundy, Managing Director, Beardsley Theobalds, 23rd July 2021
Record Output Growth for UK Manufacturers – CBI
UK manufacturing output volumes grew at the joint-fastest pace on record in the second quarter of 2021, according to the latest quarterly CBI Industrial Trends Survey.
The survey of 250 manufacturing businesses reported output increasing in 16 out of 17 sub-sectors in the three months to July, led by the motor vehicles and transport equipment and food, drink and tobacco sub-sectors.
Manufacturers expect output to grow at a quicker pace in the next three months, the strongest growth expectations on record.
Total new orders grew at their quickest pace since 1974. This reflected domestic orders expanding at their fastest rate on record, and the first rise in export orders since January 2019.
Numbers employed in the sector grew at their fastest pace since 1973, and are expected to increase at a slightly faster rate in the next three months.
Business optimism growth remained strong despite slowing from last quarter. The outlook further ahead is also more positive, with investment intentions for plant and machinery and training and retraining improving to their strongest since 1988 and 2015, respectively.
However, there are concerns about the availability of materials/components, skilled labour and plant capacity as factors likely to limit output next quarter were at their most heightened since the mid-1970s.
Rain Newton-Smith, CBI chief economist, said: "Record growth in manufacturing output volumes is further evidence that UK industry is reawakening following the economic ravages of the pandemic.
"Demand is rising rapidly, leading businesses to hire more staff and plan further investment in plant and machinery and training. Encouragingly, manufacturers expect further record output growth in the coming quarter.
"Yet other challenges lie ahead. Acute staff shortages evident across the economy are biting deeply within manufacturing, with skills in short supply and the number of people isolating climbing steeply.
"Businesses have already endured a prolonged period of inhibited demand, so it is vital that government now takes all possible steps to protect this resurgence in activity.
"In the short-term, that should mean an immediate rethink on self-isolation rules. A test-and-release system which enables healthy people to return to work would help, as would freeing double-jabbed people from isolation obligations.
"This would ensure manufacturers can operate at full capacity, and work towards capitalising on a swift recovery."