Britain’s manufacturers have seen output surge three times faster than orders in the last quarter, a new report has revealed.

Meanwhile, business confidence indicators are also starting to show the first signs of a more stable economic backdrop after years of global and domestic uncertainty.

The findings come in the Q4 Manufacturing Outlook survey published today by Make UK and business advisory firm BDO. According to Make UK, it is extremely rare for output to surge faster than orders to this degree. The last time was when companies were stockpiling ahead of a potential ‘no deal’ scenario at the end of 2019.

The survey also shows that export orders surpassed domestic orders for the first time in four years, suggesting that companies are taking advantage of new or faster growing markets in contrast to an anaemic UK economy.

Recruitment intentions have also rebounded after the blip in the last quarter and are especially strong looking forward. Meanwhile, capital investment plans weakened although they remain at reasonable levels historically.

Fhaheen Khan, Senior Economist at Make UK, said: “After the economic and political shocks of the last few years, there is some semblance of stability returning for manufacturers. While growth is not exactly supercharged, the positive announcements in the Autumn Statement can at least allow them to plan with more certainty without having to constantly fight fires.”

Richard Austin, Head of Manufacturing at BDO, added: “Manufacturers have been calling on the Government to provide targeted support to help stimulate growth and investment for some time, and it feels like some headway was made in last month’s Autumn Statement.

“Firms are ending the year on a relatively stable footing with some certainty at least in the tax environment to support their long-term investments in the UK. The hope now is that the sector can pick up the baton and drive growth.”

According to the survey, the balance on output increased to +20% in Q4 from just +3% in Q3, and is expected to remain at a similar level in the next quarter (+15%). Total orders also increased to +7% from a negative balance of -1% in Q3.

This leaves output increasing by almost three times the rate of orders in the last quarter, which according to Make UK is highly unusual. The increase may be indicating re-stocking or stockpiling ahead of next year.

In the last quarter, export orders increased to +10% from a negative balance in Q3 of -3%, while UK orders remained flat at +0%. This is the first time export orders have exceeded UK orders since before the pandemic in Q4 2019. Looking forward, export and UK orders are expected to balance out at +7% and +8% respectively.

Recruitment plans have also ramped up. After a negative balance of -1% last quarter, firms’ recruitment intentions have increased to +6% and are set to grow further in 2024 to +19% in the first quarter – an elevated balance by historic standards.

Apart from at the start of the pandemic, employment balances have been at elevated levels since the EU referendum in June 2016, indicating that skills shortages and vacancies in manufacturing are now structural, systemic problems that need to be addressed by government.

Investment intentions are at +10% which is weaker than last quarter but is continuing the trend of being positive in every quarter bar one since the beginning of 2021.

In terms of overall output this year, Make UK and BDO have upgraded their forecasts for manufacturing growth in 2023 from -0.5% to +0.8%. However, growth in 2024 is forecast at just 0.1%. GDP is forecast to grow 0.6% in 2023 and 0.4% in 2024.

The survey of 303 companies was conducted between 25 October and 29 November.