Despite the turbulence of the market following the result of the EU referendum and the continued Brexit negotiations that began early this year, manufacturing statistics have shown that the country’s economy is bouncing back to life.
In the latest report released by the office of national statistics, it was revealed that the value of UK manufacturer’s produce sales finished off at £364.7 billion in 2016. This depicts a 1.9% increase compared to the total of £357.8 billion in 2015. This is a positive turn following a 1.3% drop from 2014 to 2015 the previous year.
An overview of the main points in the report
The largest divisional growth was observed in the manufacture of trailers, motor vehicles and semi-trailers. The division grew from £6.2 billion to £54.8 billion in 2016.
The furniture manufacturing industry and the production of other non-metallic mineral products also showed a strong growth in 2015.
However, the largest decrease across the whole manufacturing sector was recorded in the machinery and equipment (not classified elsewhere) manufacturing. For the second consecutive year- between 2015 and 2016- figures fell by £0.7 billion.
It is worth noting that these statistics cover only product sales by manufacturers in the UK, and it is different from UK retail sales statistics. The statistics show estimates as the of the product sales as valued at the current price. This means they haven’t been adjusted for inflation. This is a necessary consideration for comparing the change in value over time.
Within UK manufacturing, the manufacturing of food products continues to be the largest division. Even though this division experienced a minor growth in 2016, rising by just 0.3% to £66.5 billion- 18.2% of the entire UK manufacturing sector.
Industries in this area generally had a mixed performance last year, with noticeable sales growth in grain mill products and farm animal feeds. However, there was a drop in the sales of manufacture of pastries, cake, and bread.
In general, the entire UK manufacturers’ sales have increased, although 50% of companies in the sector recorded a decline. One of the largest declines was evident in the manufacture of basic metals, which has continued to drop for the past 5 years, with a total sales decline of 33.9%- almost £3 billion- in 2011.
Why is this important?
These statistics indicate that the UK economy is bouncing back, even though manufacturing is just a segment of the whole economy. Nonetheless, it employs a total of 2.7 million people and contributes 10% of the GVA. It also makes up for 45% of the country’s total export figure.
As people continue to express doubts about the future of the UK economy post-Brexit, it is worth understanding that divisions such as automotive and food sectors are still providing excellent returns on investment.
In time, it is believed that other areas, including equipment for oil and gas manufacturing, will level up and boost the overall economy. That is not to say that this will occur overnight.
The growth will take some time, but it will happen. According to the ONS, the sustained growth will continue to a better quality, a more competent workforce and a shift in the manufacturing of goods from low to high productivity levels.