The good news keeps on coming for manufacturing

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Today we got further evidence that the UK economy, and in particular manufacturing ended 2016 strongly, with both the Index of Production and UK trade data making for pleasant reading.

Index of Production

Manufacturing output is booming. The month-on-month increase in output was an impressive 2.1%, up 4% from the same month a year ago. This has helped to contribute to an overall increase of 1.2% for the final quarter of 2016, and up 0.7% for the year as a whole.

So basically all the numbers are positive, and are going in the right direction. Not bad considering what we had feared back in July…



The headline figure once again came from the highly erratic pharmaceutical sector, which increased by a hefty 8.3%.

Encouragingly, even taking into account the pharmaceuticals sector, increases in output were widespread across the other sectors with metal products, electronics and other manufacturing all posting notable growth. In fact only rubber and plastics and electrical equipment bucked the positive trend, posting negative growth of 0.5% and 1.9%. This however did follow strong growth in the previous month and could at least be partially down to an unwinding effect.



These figures therefore paint a healthy picture, with growth being broad based across most sectors, instead of relying on a few high performing ones.

This will have provided manufacturing with real momentum going into 2017, evidenced through impressive PMI recordings and the other week’s preliminary GDP figures (although an upward revision could now be on the cards).



Exports once again were on the up, building on momentum seen throughout the second half of the year. The trade in goods deficit narrowed by 17% to £32.5 billion in the final quarter of the year, reflecting a 10.4% increase in exports, and a much smaller increase in imports (0.9%).

Manufacturing exports played their part, up 5.7% in value in q4, as well as up 5.8% in value for 2016 as a whole. This notably represents the strongest year on year growth in manufacturing exports since 2011.

Although the familiar narrative was at play here – enduring healthy demand conditions in key export markets as well as support from the weaker pound – there was some interesting sector factors too. In particular the aerospace industry, which saw significant increases in exports of aircraft to EU and non-EU countries in the final quarter. This is likely down to a catch up of deliveries being reported, following supply chain disruptions earlier on in the year.



Today’s data once again supports what we have been hearing from our members, both in our Executive Survey, and on the ground, that business is very good. Order books are full and manufacturers are working at full capacity.


Calling all EEF members – our Manufacturing Outlook Survey is currently out in the field. Please look out for it in your inbox – if you haven’t yet been invited to, but are keen to tell us what’s happening in your business drop our research team a line at   



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