State of industry report Q1 2024
20 May 2024
Business confidence rose in Q1 to 20%, its highest level since the FDF began tracking it, showing some growing optimism for 2024. However, investment intentions for the coming year are subdued, with 40% of respondents are planning to keep their investment expenditure unchanged from the previous year and just over 40% aim to increase it. Against a backdrop of a persistent decline in industry’s investment for the past four years, these figures suggest investment is unlikely to return to pre-pandemic levels soon.
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- Business confidence rose in Q1 to 20%, its highest level since the FDF began tracking it, showing some growing optimism for 2024.
- 84% of manufacturers are primarily focused on UK sales to grow their business, with new product development as the second highest growth strategy.
- About 50% of manufacturers plan on maintaining similar levels of investment over the coming year, and just over 40% plan on increasing their investment. With industry’s investment 30.5% below its 2019 levels, Q1 intentions suggest it will take time before we return to pre-pandemic investment levels.
- Investment was limited by changing business environment (47%), demand uncertainty (43%) and the cost of finance (26%).
- Industry continues to be innovative with 78% of respondents investing in healthier product development in 2023. 85% of respondents develop innovation fully in-house with some collaboration with third parties: retailers (35%), research / innovation organisations (31%) and universities (25%).
- Industry’s labour shortages stood at 5.0% compared to 5.2% in Q4, and remained above rates in wider manufacturing (2.7%) and the UK (2.9%). Skills shortages continue to impact different roles and levels, from engineers and managers to technicians and food packers.
- The average pay rise in the industry was 6.0% over the year to March. This was above manufacturers’ expectations in Q1 2023 of 5.4% for this period.
- On average, total production costs increased by 9.2% over the year to March, while selling prices rose by 4.3%. For the year to March 2025, manufacturers expect their costs to rise by 2.1% and prices by 1.1%.