Manufacturing production bodes well for 2016q2 growth

Subscribe to Campaigning blog feeds


Today’s industrial production report adds to evidence that UK manufacturing was turning a corner prior to the referendum.

Manufacturing production weakened modestly in May but this was driven by a pull-back following its large rise in April rather than uncertainty prior to the referendum weighing on activity. Monthly economic data can be volatile and large swings are often followed by a move in the opposite direction. Our Manufacturing Outlook survey for 2016q2 indicated that there were no concrete signs of the referendum having a material negative impact on the sector so far.


Manufacturing was turning a corner…

Prior to the referendum, manufacturing seemed to be turning a corner after a period of sustained weakness. The low crude oil price, weak global economic growth, and the world-wide oversupply of steel had weighed heavily on the sector. However, official data and our survey indicate that the drag from these challenges has eased since early this year.

The performance by manufacturing sector was mixed. The falls in pharmaceuticals, textiles, electrical equipment, and rubber and plastics sectors are not necessarily something to worry about because they mirrored gains in April. Pharmaceuticals has recently benefited from new products coming on stream following the end of the patent cliff. Meanwhile, some consumer-facing sectors such as food and drink held up, suggesting private consumption remained firm during the second quarter of this year.


Manufacturing production in May bodes well for the sector’s output in 2016q2. Thanks to the strong rise in April, unless we see a spectacular drop in activity in June, manufacturing is likely to have grown in the second quarter. In such an event, manufacturing will grow for the first time since late last year.

…but will the referendum derail manufacturing’s recovery?

It’s still too early to say if the referendum result will bring a halt to manufacturing turning the corner.  July’s industrial production report, which is due out in September, will be the first following the referendum. Yet we may not know the impact of the referendum for some time if the resulting uncertainty leads manufacturers to wait and see what will happen before making any major decisions.

Stay tuned for blogs on incoming reports, events and feedback from manufacturers about how business conditions are developing. Also, you can also keep updated our free weekly policy intelligence briefing, which you can sign up to here.


This person has now left EEF. Please contact us on 0808 168 1874 or email us at if you have any questions.

Other articles from this author >
intelligencebriefingspotlight EEF Westminster Weekly

Sign up to receive the EEF Westminster Weekly - our regular round up of campaigning activities

Read more >
EEF Conference Stay up to date on the National Manufacturing Conference

Read all the news from the latest conference and don't miss out on securing your place for the next event.

Read more>
Online payments are not supported by your browser. Please choose an alternative browser or make payments through the 'Other payment options' on step 3.