Region’s manufacturers ‘starting to feel the squeeze’, analysis…

Region’s manufacturers ‘starting to feel the squeeze’, analysis shows

MANY manufacturers in the region are “starting to feel the squeeze”, according to new analysis.

Rising interest rates, combined with the cost-of-living situation and slowing overseas markets, are having an impact.

But despite fears around a further downturn, results reveal a “mixed picture” for the Yorkshire and Humber manufacturing sector in 2023.

Information has been analysed by Make UK, an organisation representing manufacturers, and accountancy and business advisory firm BDO LLP.

They say manufacturing in Yorkshire and Humber enjoyed a strong performance in the first half of the year, amid a recovery at home and abroad, but that has now gone into reverse as consumer spending slows and overseas markets weaken.

However, conversely, order levels for the final quarter are strong and substantially above the national average.

And the contrast also extends to recruitment in the region, which was weak in the last quarter – down 25 per cent – but is forecast to pick up in the final quarter of the year.

Investment intentions have also weakened significantly and are currently flat at zero per cent, which is below the national average.

With regard to overall output this year, Make UK and BDO are forecasting a contraction of -0.5 per cent, slightly worse than the -0.3 per cent forecast in the second quarter.

Forecasts for growth next year have been downgraded from 0.8 per cent to just 0.5 per cent.

Dawn Huntrod, regional director of Make UK, says: “Manufacturers are seeing a mixed picture as the potent cocktail of rising interest rates, cost of living and slowing overseas markets bites hard.

“Whilst it’s clear that the Chancellor doesn’t have a financial war chest to try to boost growth, he should use his autumn statement to bring forward carefully targeted measures which could make a difference to companies’ efforts to boost skills and productivity. He should use whatever is available to get the best bang for his buck.”

Steve Talbot, head of manufacturing at BDO in Yorkshire and Humber, says: “The region’s manufacturers are starting to feel the squeeze as the Bank of England’s plan to stamp out inflation takes hold. In the absence of an overarching industrial strategy from government, businesses will be tightening their purse strings, protecting margins and focusing on building operational efficiencies over the next few months.”

Make UK represents 20,000 companies of all sizes – from start-ups to multinationals – across engineering, manufacturing, technology and the wider industrial sector.

A spokesperson said: “Everything we do is designed to help British manufacturers compete, innovate and grow.”