Reflecting on the UK manufacturing sector’s performance during the first quarter of 2023, Glynn Bellamy, UK Head of Industrial Products, KPMG, said:
“Supply has improved and some input costs have fallen, yet the UK manufacturing sector is struggling compared to some parts of the economy – as domestic and export demand for manufactured goods remains subdued by the cost of living crisis and short-term demand is adversely impacted by de-stocking in supply chains. The latter is the negative side of the easing of supply chain pressures and the unwind of the benefit many manufacturers experienced in 2021 and 2022 as there was a drive to build safety stock levels. Production volumes have subsequently fallen, costing jobs in the sector.
“Whilst some input costs have fallen, UK energy prices remain significantly in excess of those in North America and the Far East, placing ongoing pressure on UK competitiveness. Given these dynamics, UK manufacturing needs an upturn in global consumer confidence to lead to more big ticket purchasing, but manufacturers will be acutely aware how volatile the global consumer landscape remains, particularly with the ongoing uncertainty over future interest rate rises.”