The forecasts show the diverse nature of modern manufacturing in the UK, but also the vast array of global factors at play which are set to exert varying degrees of influence on the growth prospects of individual sectors next year.
EEF’s analysis shows that the leader sectors such as transport, in particular motor vehicles and aerospace, and the rejuvenation of pharmaceuticals continue to provide considerable reasons for optimism. These sectors will not only drive output growth in the year ahead, but they will also buck the wider manufacturing trend of reduced employment with an increase in job numbers in 2016.
In contrast, the collapse in oil and gas activity, weakness in key export markets and strong sterling are providing considerable challenges for other sectors. Factors closer to home that have dragged on manufacturing activity in 2015, including disappointing construction activity, should be a less prominent issue for exposed manufacturing sectors in the next 12 months.
Lee Hopley, EEF chief economist, said: “Manufacturing is a hugely diverse part of the UK economy. Looking at the sector as a whole growth has disappointed in 2015 and we’ve seen overall confidence levels tail off through the year. But to get a true sense of where the sector stands going into 2016 we have to look at the variation in performance across different industry segments with some sectors enjoying a positive momentum, while others have been hit hard by global factors largely outside of both their and UK government control.”
She added: “Looking forward this divergence in performance shows no signs of abating though most manufacturing sectors should see positive growth next year, albeit at varying levels. Risks and opportunities will undoubtedly abound next year and our mix and the agility of the firms, with 2016 expected to be a more positive one for UK industry.”
