MANUFACTURERS in Yorkshire & The Humber saw the delayed recovery finally arrive in the final quarter of 2016 with a much-improved boost to output and orders, according to a survey by EEF, the manufacturers’ organisation, and accountants and business advisory firm BDO LLP.

Publishing the Q4 Manufacturing Outlook survey and revised economic forecasts, EEF pointed to early signs that the sector has left behind the negative effects of the low oil price and concerns about global growth and is now seeing opportunities from a resilient UK market and brightening export prospects.

However, EEF stressed that the picture is one of the sector regaining ground after a sluggish 18 months. While key indicators moving back into the black was positive, risks remain on the horizon, some Brexit-related and others potentially stemming from elsewhere in the world. This means EEF is still forecasting that manufacturing will contract in 2017.

Furthermore, EEF also pointed to inflationary pressures building and significant price rises in the pipeline, a factor likely to weigh down on domestic activity in the year ahead. Profit margins are also under considerable pressure and are likely to be squeezed further in 2017.

According to the survey output in Yorkshire & The Humber in the last 3 months increased by a balance of +10 per cent, although it is expected to ease back in the next three months. New orders for the last three months were also strong at +19 per cent, while in line with this better picture more companies across the region increased employment in the last three months to meet capacity with a balance of +10%

Andy Tuscher, EEF Region Director for Yorkshire & The Humber, said: “This is the most upbeat reading on the state of manufacturing we’ve seen for some 18 months and signals the start of brightening conditions for manufacturing, which had been briefly knocked off course following the referendum.

“This anticipated turnaround can be attributed to a range of factors including the resilience, thus far, of the UK economy but also the strengthening of demand in a number of major markets. Critically, this should spur some new investment and recruitment activity to meeting fulfil new customer demands.

“While confidence is back on the up, manufacturers are still cognisant of growth challenges in the near term. Brexit aside, global growth is not yet on the firmest of footings and, with volatile exchange rates also in the mix, UK manufacturers will need to continue to be nimble in their responses to emerging challenges and opportunities in the months ahead.”

Jason Whitworth, Corporate Finance Partner and Head of Manufacturing at BDO LLP in Yorkshire and The Humber, said: “Despite uncertainty at home and abroad, UK manufacturing is proving to be resilient. It is promising to see that five months on from the referendum, manufacturers in the region are reporting increases in both output and orders.

“The depreciation of sterling is helping manufacturers export more and they are seeing a steady increase in appetite from the EU and US. However, this is putting additional pressure on the cost of raw materials being imported and therefore profit margins for manufacturers, which will ultimately push up prices.

“Brexit means a period of challenge and vulnerability for the sector and businesses need stability and certainty in government policy if they are to continue to commit to the investment that the country needs to grow.”