The latest Contract Manufacturing Index (CMI) reveals a robust finish for the UK subcontract manufacturing market in 2023 after facing challenges throughout the year. The index, indicating the value of contract and subcontract manufacturing services, experienced a notable rebound in the fourth quarter, rising by 106% compared to the previous three months.
The overall market concluded the year 7.5% higher than at the end of 2022, marking a significant recovery from an all-time low in August. The challenging performance earlier in the year was attributed to project delays and stock reduction efforts by buyers amid uncertain demand.
Compiled by sourcing specialist Qimtek, the CMI represents the total purchasing budget for outsourced manufacturing, involving over 4,000 companies with a combined purchasing budget exceeding £3.4 billion and a verified supplier base of over 7,000 companies with a turnover surpassing £25 billion.
The Q4 2023 CMI reached 78.5, a notable improvement from 38.1 in Q3 2023 and 73 in Q3 2022. Fabrication emerged as the strongest sector, experiencing a 160% increase from the previous quarter and a 12% rise from the previous year. Machining demonstrated significant growth, increasing by 51% compared to the previous quarter and 2.4% from the previous year. Other processes, including molding and electronics, saw a modest 0.5% year-on-year increase.
Throughout the year, the industrial machinery sector held the largest market share, followed by food & beverage and electronics.
Qimtek has also introduced the tracking of average lead time, which remained consistent at 22 days throughout the year.
Owner of Qimtek, Karl Wigart, commented on the figures, stating that the rebound in Q4 2023 was due to buyers releasing new projects and suppliers responding to increased quoting activity. The positive trend observed in the last quarter is expected to continue, reflecting a surprisingly busy start to the new year.