The BFM's latest state-of-trade report has revealed a dramatic fall in manufacturer output over the last four months to June 2019, with 45% of the companies surveyed reporting reduced output – compared with 14% reporting increased output.
This represents the worst UK industry performance for eight years, and is in stark contrast to the positive output figures reported in the previous two surveys. As a result of the decline, 16% introduced short time working, 26% made redundancies, and new orders in the period were flat.
However, looking beyond the summer – traditionally a quiet period for most – the expectation is that orders and output will improve significantly, together with employment levels.
The BFM's survey also looks at prices and price trends, and despite foam chemical prices reducing over the last year, a strong balance (45%) of manufacturers reported overall increases in material costs, with most categories continuing to show increases.
Labour costs too continue to rise, with a strong balance (53%) of respondents reporting increases in wages. Increases in the National Minimum Wage and the National Living Wage were introduced during the period surveyed, and wages are also under pressure due to skills shortages (the BFM is actively involved though FIESTA in improving the availability and levels of skilled people in the industry).
The June survey also contains an examination of company financial ratios, and a matched sample suggested that there had been a concerted effort to reduce overheads as a means to offset the increased cost of manufacturing.
The full report is published three times a year, and is available to members of the BFM.