BRITAIN’S main manufacturing trade body Make UK revised up its outlook for this year on Monday, thanks to strong demand for aircraft and electronics, but said it still expects production to fall over the year as a whole.

Make UK said it expected factory output to fall 0.3 per cent this year compared with a 3.3 per cent contraction expected three months earlier, and kept unchanged its forecast for 0.8 per cent growth in 2024.

“Manufacturers are seeing a gradually improving picture, but the word ‘gradually’ is doing a lot of heavy lifting,” said James Brougham, senior economist at Make UK.

The improved but still sluggish outlook chimes with the picture for the broader economy, which has avoided a widely forecast recession and which Make UK expects will grow 0.4 per cent this year and 1.3 per cent in 2024.

Manufacturers reported modest order growth and plan a marked step-up in hiring. Aerospace had been boosted by a resumption of travel and aircraft orders after the Covid-19 pandemic, while demand for electronics partly reflected businesses’ desire to counter labour shortages.

Supply-chain pressures remain an issue for medium-sized firms, said Richard Austin, head of manufacturing at accountants BDO, who sponsored the survey of Make UK members.

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“They are facing continued disruption and increased costs at home and abroad, with many choosing to onshore operations but facing major barriers in doing so,” Austin said.

Difficulties in sourcing materials were a major factor behind the initial run-up in British inflation before Russia invaded Ukraine, but many economists had judged these were fading.

Consumer price inflation data due on Wednesday is likely to show a fall to 8.5 per cent in May from April’s 8.7 per cent, according to a Reuters poll of economists. REUTERS