Food and drink manufacturing industry outperforms other sectors

A new report shows that out of all monitored UK sectors, the food and drink manufacturing industry outperformed them all in both output and new order growth.

According to the data, UK food and drink producers were the primary drivers for the wider manufacturing sector’s first expansion in output in more than a year.

The latest Lloyds Bank UK Sector Tracker also revealed that overall, nine out of the 14 sectors monitored reported output growth in March, which is one fewer compared to the previous month.

Nikesh Sawjani, Senior UK Economist, Lloyds Bank, said, “Our latest report provides some tentative signs that UK manufacturing may be finally coming out of a challenging couple of years.

“However, growth is largely concentrated in one or two areas – particularly food and drink – rather than spread across the whole sector with other parts continuing to be hit with declining demand. This suggests that manufacturing still has some way to go towards making a sustainable recovery.

“That said, there are encouraging signs in terms of purchasing activity. Three of the seven manufacturing sub-sectors reported a rise in input buying in March, representing the most broad-based improvement since May last year, and a positive signal for UK manufacturing prospects.”

Aled Patchett, Head of Retail and Consumer Goods, Lloyds Bank, added, “Of the sectors we monitor, food and drink manufacturing is the one that has most consistently cut prices over recent months. If this trend continues, this could help support the future growth of businesses that purchase wholesale food stocks, such as supermarkets, restaurants, pubs and hotels, and reduce costs for end-consumers.

“However, there’s renewed pressure on firms when it comes to their own input costs. As well as potentially forcing businesses to pause price-cutting, or even start to raise prices again, this will be putting an immediate squeeze on working capital. That’s something management teams across the sector will need to be closely tracking in order to minimise the impact and maintain their long-term resilience.”

To find out more about contracting please contact Lauren on 01206 591 000 or email lauren.monks@contractorumbrella.com.