The breaking of the Brexit impasse has led to a surge in confidence among the South West’s SME manufacturing businesses, according to the latest South West Manufacturing Barometer report.

The previous quarterly study revealed a sector experiencing its toughest quarter in a decade, with more SME manufacturers reporting a reduction in sales, profits and staff numbers than in any period across the last ten years.

But the latest South West Manufacturing Barometer, published by SWMAS, highlights a marked uplift in confidence among the region’s manufacturing businesses following the UK’s exit from the EU at the end of January.

Some 42 per cent – say they are more confident about their prospects than this time last year, with 24 per cent feeling broadly the same and 34 per cent feeling less confident.

Simon Howes, MD of SWMAS, said there was a feeling that

“the foot is coming off the brake”

as a clearer picture begins to emerge around Brexit.

“The forecasts for the first six months of 2020 are starting to look much more positive,”

says Simon Howes.

“We are not yet at the end of the road regarding Brexit, but it seems that we have at least decided which road we are going to take, so our manufacturers can begin the journey.

“Political certainty appears to have improved clarity, resulting in a (partial) return to confidence in future sales and profits. This, in turn, should lead to more confidence in investing and recruiting.

“This quarter’s special focus looked at the underlying confidence of SME manufacturers to gauge how they are feeling as they plan for 2020 and beyond. The results show that there is still a good deal of uncertainty, with some still feeling downbeat regarding their prospects for the future.

“However, it is encouraging to note that many senior people in manufacturing are now feeling more confident.”

The latest South West Manufacturing Barometer also found that:

• Despite the surge in confidence about the future, only 32 per cent of manufacturers in the region have recorded an increase in sales in the past six months – a substantial drop from the preceding quarter and down from a figure of 51 per cent 12 months ago

• However, 55 per cent of SME manufacturers expect sales to increase over the next half-year – up 15 per cent on the previous quarter and the same as a year ago

• Almost half – 49 per cent - forecast profits to increase in the next six months – up 17 per cent on the last Barometer and a 4 per cent increase on the previous year

• The percentage of businesses expecting investment in plant and machinery to increase in the next six months is up 13 per cent in a year, from 41 to 54 per cent

• Recruitment expectations are broadly flat compared to a year ago – but up 10 per cent to 43 per cent in the last quarter in terms of the number of firms expecting to increase headcount

“The general clamping down on investment and recruitment decisions is finally easing,”

says Simon Howes.

“Customers are now coming forward with plans which were previously on hold, but we know too that some sectors are finding it tougher than others.

“We will be working with our manufacturing clients across the region to take a closer look at these differences and to understand the lessons that can be learned going forward in terms of people, products and processes.”

The full South West SME Manufacturing Barometer report can be found at https://www.swmas.co.uk/knowledge/south-west-2019-q3