The latest data from the Contract Manufacturing Index (CMI) underscores a positive trajectory for the UK subcontract manufacturing market in the first quarter of 2024. According to the index, there was a notable uptick of 4.5% during this period, building upon the momentum witnessed towards the end of 2023.
Projects and budgets that had been previously on hold have now been unleashed, resulting in increased activity as orders are placed and suppliers actively vie for contracts. February emerged as a standout month, recording the strongest performance since March 2023.
While January and February saw a decrease in lead times from the average of 22 days to 18 days, March witnessed a slight lengthening to 21 days. Despite these fluctuations, the overall market remains approximately 30% below its level a year ago.
The CMI, compiled by sourcing specialist Qimtek, reflects the total purchasing budget for outsourced manufacturing among companies seeking to engage in business activities each month. This data represents a comprehensive sample of over 4,000 companies with a collective purchasing budget exceeding £3.4 billion, and a supplier base of over 7,000 companies boasting a verified turnover surpassing £25 billion.
Established on a baseline of 100, which represents the average size of the subcontract manufacturing market from 2014 to 2018, the CMI for Q1 2024 stood at 82, compared to 78.5 for the previous quarter and 117 for Q1 2023.
Analysis of market segments reveals that machining accounted for 48% of the market share, marking a 35% increase from the previous quarter, while fabrication represented 49%, reflecting a 5% decrease. The remaining portion of the market comprises various processes such as moulding and electronic assembly.
Industrial Machinery emerges as the largest single sector, maintaining its position for the past three years. The value of this sector nearly doubled in the first quarter compared to the previous one. Construction follows as the second-largest sector, trailed by items destined for the Electronics sector and Food & Beverage.
Commenting on the findings, Karl Wigart, owner of Qimtek, expressed optimism, stating, “It was a good quarter with lots of projects that had been promised but delayed in the second half of last year finally coming on stream.” Wigart emphasized the heightened activity among suppliers, with reduced lead times indicating a proactive approach to seizing opportunities in the market.