The South’s manufacturers have endured a tough start to the year with conditions remaining around a three year low according to the first quarter manufacturing outlook survey published today by EEF, the manufacturers’ organisation and business advisers BDO.
Demand conditions remained difficult across a number of markets, but Europe again stands out as being especially challenging. However, the survey also shows there are signs that manufacturers’ could see conditions turn around in the coming quarter with output of +28%. In particular there is a notable improvement in the proportion of companies planning for growth in overseas sales in the next three months and, importantly, this trend is fairly widespread across most manufacturing sectors.
The survey also shows with a forecast improvement in trading conditions in the months ahead, manufacturers are planning to increase their capital investment and employment levels by +11%.
Commenting, Ms Lee Hopley, EEF Chief Economist, said:
“As expected, manufacturers have seen a tough start to the year as weaker conditions at home and abroad dragged on from the end of last year. However, the outlook may be somewhat brighter looking forward and with more companies expecting to see growing production and sales in the next three months. This confidence is still fragile; world events have been moving quickly and at the moment it doesn’t take much for customers to hold back on placing orders.
“Nevertheless, the UK economy needs positive news, particularly as growth driven by more trade and investment has still to materialise on a more sustained basis. But a recovery with a bit more momentum behind it cannot be taken for granted. Government cannot afford to let up in efforts to take a more dynamic approach to boosting growth through investment, starting with the Budget in a few weeks time.”
Arbinder Chatwal, Head of Manufacturing at BDO Southampton, said:
“These figures round off a gloomy six month run for the sector, however, the storm clouds do seem to be parting slightly. Sentiment is improved for the next three months which is translating into increased employment and ongoing plans for investment. Much of this is being driven by positive export expectations despite the fact that the landscape in Europe remains uncertain. What is needed is positive action, either from Government or increased lending from the banks, that provides the impetus to move positive intentions into actual output and sales.”
