Automotive sector leads manufacturing resurgence but there’s still some way to go

Glynn Bellamy, partner in KPMG's aerospace and defence practice, says: "Behind the headline GDP data there is a continued resurgence in the manufacturing sector which is no longer primarily UK focused but operates on a global stage. Whilst the UK focused service and construction sectors have been impacted by the adverse weather, the manufacturing sector has reported an upward trend in GDP reflecting its linkage to the wider global growth trends. This highlights the continued need for the UK to promote a stable and competitive fiscal environment that continues to support investment in the manufacturing base." Colleague Mike Steventon, while regarding UK GDP output for manufacturing as positive, says the sector is still operating below pre-recession levels. He commented: "Manufacturing has continued to grow strongly in the fourth quarter of 2010 with a quarterly improvement of 1.4% and a year on year growth of 3.8%. Manufacturers have been helped by a weakening in sterling and strong demand from the developing economies for UK manufactured goods. "The shining star was automotive manufacturing where annual car production in the UK rose 28% to 1.4m vehicles and engine production rose 16% to 2.4 million engines. The majority of the cars and engines manufactured in the UK are exported which represents a significant contribution to the UK's balance of trade. "Demand from overseas consumers for UK manufactured cars such as Jaguar, Land Rover and Mini, as well as the Nissans, Hondas, Toyotas and Vauxhalls built in the UK, has provide a substantial stimulus for economic growth and the Midland's auto industry has been a significant beneficiary. "The UK is home to a diverse range of car manufacturers including Aston Martin, Bentley, Rolls Royce, McLaren and Lotus (pictured) and these prestige brands are in demand around the globe. "It should however be noted that UK manufacturing is still operating below pre-recession levels and further growth of approximately 10% is need to get UK manufacturing back to pre-credit crunch activity levels."