Strong demand from firms in the aerospace and renewable energy sectors has helped South West manufacturers enjoy a rebound in activity since the start of the year, according to a new survey.
Both domestic and global markets have improved since then end of 2022, easing fears of a significant recession for industry this year, the latest Make UK/BDO Manufacturing Outlook shows. 
But the worst might not be over yet, the survey’s overall results suggest, and the sector in the UK is still expected to contract this year.
The survey shows that output and orders picked up in the region, with an especially strong output balance of plus 33%.
This was driven primarily by export orders – at plus 16% – which ties in with the strength of demand in aerospace.
On the back of this, employers’ intentions to both recruit and invest have also improved, according to the survey results.
The regional picture echoes gradual improvements in national and international data such as the UK and European PMIs (purchasing managers’ indices), which are now only just in negative territory, as well as a strong pick-up in demand from China. 
The report also points to the fact that the aerospace and renewable energy sectors are among the biggest sectors in the South West, with aerospace in particular continuing to benefit from a strong post-pandemic recovery.
Looking ahead, manufacturers in the region are confident of further output growth with domestic and export orders predicted to grow significantly over the next three months.
This is reflected in improving job prospects, with the balance on recruitment intentions especially strong at plus 40% – very high by historical standards.
But despite the improvement this quarter, Make UK – which represents more than 20,000 manufacturing businesses of all sizes – fears the worst may still not be over.
It is forecasting that UK manufacturing will shrink by 3.3% for this year – a slight improvement on the 4.4% contraction it forecast at the end of last year – as it continues to warn that the substantial challenges the sector is facing show few signs of abating.
While it expects growth to return next year, it is likely to be just 0.8%.
Make UK South West director Jim Davison, pictured above, said: “Manufacturers in the South West have seen a rebound at the start of the year as conditions have improved in their major markets and business confidence has improved.
“However, one swallow doesn’t make a summer and it is far too early to say the worst has passed given the significant challenges the economy faces.”
He said last week’s Budget should help boost investment in the short-to-medium term, but added that, ideally, ‘full expensing’ – which allows companies to claim a 100% deduction from taxable profits in one year – should be made permanent to better reflect the investment cycle for manufacturers.
Matthew Sewell, South West head of manufacturing at accountants BDO, added: “The region has started the year with some positive news, with both output and orders picking up.
“However, the latest government announcements do little to reassure the UK manufacturing sector.
“The sector needs certainty on a range of fronts, including long-term energy support and assistance to build a sustainable workforce.”
