UK manufacturing industry sees the most job losses in the economy in the last year

Publications that covered this story include i, Metro, City AM,  The Times, Daily Express, the Belfast Telegraph, all on 19 December 2016.
  • Manufacturing of cars bucks overall trend of falling employment numbers 
  • Warehouse activities sees an increase as e-commerce industry expands

The UK manufacturing industry saw some of the biggest job losses of all sectors across the UK economy last year, according to our latest research.

We explain that out of the 69 sectors measured for job creation, manufacturing made up three out of the worst five areas in terms of percentage change in employment numbers last year.

The manufacture of chemicals saw a 12.9% decrease in employment numbers to 88,000 from 101,000 and came last out of the 69 sectors. The manufacture of computers came 67th with an 11.5% decrease in jobs and the manufacture of pharmaceuticals was ranked 66th with a 9.8% decrease (see table below).

This fall in employment numbers can be attributed to the ongoing shift in manufacturing to countries where labour costs are lower, such as China or Vietnam.

These sectors have seen considerable technological innovation over the years which has further reduced the number of jobs available as machines continue to take over from humans in factories.

Manufacture of cars bucks overall trend of falling employment numbers

However, we state that the manufacture of cars is the one exception to the trend of falling employment numbers, as the sector saw a 7% rise in job creation from 142,000 in 2015 to 152,000 this year. The industry’s increasing output could explain this rise, as 13% more cars were manufactured in the first six months of this year than in the same period in 2015.

The UK car manufacturing industry has received a further boost of confidence recently with Nissan deciding to increase the size of its Sunderland factory despite the Brexit vote.

However, despite the positive signs within car manufacturing, output for manufacturing overall actually fell by 0.9% during the third quarter of this year. (Source: Office for National Statistics).

This is despite claims that the UK’s manufacturing industry would benefit from the fall in sterling post-brexit.

We explain that although the weaker pound may make exports cheaper, it also makes the import of components and raw materials more expensive for UK based manufacturers. Furthermore, some manufacturers may be hesitant to invest in current operations until they know the UK’s future terms of trade with the EU.

Paul Daly, partner, says: “Manufacturing has seen employment numbers fall sharply in the face of international competition and ongoing technological advances.”

“The obvious exception is car manufacturing which saw a rise in employment numbers and output last year which bodes well for the industry’s future as the UK prepares to leave the EU.”

“Although the weaker pound should make exports cheaper, the fall in output last quarter for manufacturing overall is a worrying sign that the full effects of the Brexit vote are yet to be realised.”

Oil and gas sees falling employment numbers whilst e-commerce boosts warehouse activities

Another area which saw a big fall in employment numbers was the oil and gas industry.

We explain that the extraction of crude petroleum & natural gas also featured in the bottom five and saw an 11.8% decrease in employment numbers from 17,000 to 15,000. The industry has had a tough year due to the volatility in the price of oil, forcing many businesses to cut costs and employee numbers.

Warehousing activities saw growth in employment numbers and finished fifth out of all UK industries with a 7.8% increase, from 295,000 to 318,000. The UK’s ecommerce market continues to grow and online retailers such as Asos and Boohoo are rapidly increasing their distribution networks across the UK.

Paul continues: “Towards the top, growing employment numbers associated with warehouse activities demonstrates the fundamental changes underway within the retail sector.”

“The fluctuations in employment numbers across different sectors makes for interesting reading and provides key insights about the shifting landscape of the UK economy.”

Manufacturing sectors saw large decreases in employment numbers last year – percent change in employment numbers

*Relevant to 1 January 2016, latest figures available.