Manufacturing output back above pre-pandemic levels

All English regions and the three devolved nations have seen manufacturing output rise back above 2019 levels for the first time, according to a major report which analyses the contribution of manufacturing to each English region and nation.

The Make UK/BDO annual Regional Manufacturing Outlook report examines various official data including output, employment, sector strengths, exports and wider trade patterns.

The latest data on output to the end of 2023 (the latest data available) shows that while all regions and nations are back above 2019 levels, the South West was the strongest performing region with output more than a quarter (27%) above 2019 levels. This was followed by the East of England (21%) and the North West whose output was up by a fifth.

According to Make UK, the growth in the South West and North West in particular is likely to have been driven by a surge in spending by the aerospace and defence sectors, due to large orders from the major airlines for new aircraft and, the ramping up of defence spending across Europe.

These are the biggest sub sectors in each region, accounting for more than a quarter (25.8%) of output in the South West and just under a quarter (23.5%) in the North West. Output in the North West is also likely to have been aided by increased production in the Automotive sector following the post Covid slump.

Fhaheen Khan, Senior Economist at Make UK said: “It’s taken some time and, some regions are striking forward at a faster rate than others, but hopefully the post covid malaise is now firmly in the rear view mirror. What this year’s report does show, however, is that we are likely to see a growing divergence between those regions and nations that have the sub sectors where greater levels of investment are taking place. In developing Local Growth Plans, many of which will see Advanced Manufacturing play a central role, Government must be mindful to ensure that growth is evenly spread.”

Richard Austin, Head of Manufacturing at BDO added: “The impact of the pandemic on the manufacturing sector can’t be understated. Having battled grounded flights, reduced demand and disrupted supply chains - to see manufacturing bounce back with such renewed force is a testament to the industry’s resilience and the strength of the regions they are working in.

“As these sectors pick up pace once again, they’ll need all the help they can get in order to maintain the UK’s position as a global leader. The industrial strategy is a good start but they’ll need continued investment in design, innovation, and skills across the whole of the country if they’re to weather global trade disruption.”

The report also shows that there is likely to be a diverging impact of US tariffs across all regions and nations with some more heavily exposed to the US market than others. The West Midlands has the strongest exposure with automotive exports accounting for a large part of the 26% of West Midlands exports destined for the US. The East of England (22%) and London and the South East (18%) also have a proportionately larger share of their exports going to the US than other English regions and devolved nations.

Furthermore, the report also shows a continued decline in exports to the EU for all English regions and nations. Wales remains the most dependent on the EU with almost two thirds (61%) of Wesh goods destined for the bloc, although this figure represents a decline of around 10% since 2020 when approximately three quarters of Welsh exports went to the EU.

The survey also shows that the number of manufacturing jobs increased by 12,000 in the twelve months to March 2024. This brings the total number of jobs in the sector to just under 2.6 million. However, there was a sharp divergence across regions and nations with Wales and the East Midlands both seeing a decline in manufacturing jobs by 12,000, while the West Midlands and East of England saw increases of just under 10,000 jobs.