Manufacturers in the south have seen prospects improve, according to the second quarter Manufacturing Outlook survey published today by EEF, the manufacturers’ organisation, in conjunction with accountants and business advisers BDO LLP in Southampton.
The survey indicates that both output and orders for South East manufacturers have strengthened in the last quarter, to a balance of +45% and +32% respectively compared to the 28% and 22% predicted. Only manufacturers in the East Midlands recorded a higher order book balance, with the South East reporting the highest output balance.
UK wide, the domestic market has improved as companies report the first positive balance on UK sales since 2012q2. However, responses were somewhat weaker on export sales, and manufacturers are a bit less optimistic about a strong rebound in overseas sales compared with three months ago.
Commenting, Ms Lee Hopley, EEF Chief Economist, said:
“Positive manufacturing data have been somewhat easier to find in recent months, and our latest survey provides further confidence that the sector’s prospects are improving. While the demand environment in major European markets remains weak and some individual industrial sectors are facing their own specific challenges, the widespread improvement in our survey indicators is welcome news. However, a couple of aspects – namely the relative weakness in export orders and the softening in investment intentions – suggest that confidence may still be tempered for now.”
Also commenting, Arbinder Chatwal, Head of Manufacturing at BDO LLP in Southampton, said:
“There seems a definite lightening of the mood amongst manufacturers in the region supported by positive order balances, particularly on the South coast. If these results are anything to go by, it’s not doing any harm to manufacturing SME confidence for future growth and jobs creation in the Solent region. However, recovery in the sector still remains tentative, which is clearly illustrated by firms’ reluctance to commit to future investment plans. The survey results also shows that companies are less optimistic about export orders, but it is not yet clear whether this is due to the difficulties in Europe or difficulties in establishing a sustainable presence is the fast growing emerging markets. It is at this important point where it is crucial for Government and lenders to get behind the numerous positive indicators emerging from the sector, and do all they can to help build the momentum of a recovery or risk seeing things stutter once more.”
Looking forward, South East and South West manufacturers appear confident that output will remain at a positive balance of 40% and 12% respectively, but are less optimistic of new work coming though in the next three months.
With medium-long term growth still unclear, investment intentions have taken a hit. In the past quarter, the number of companies looking to invest has fallen slightly, with the percentage balance of businesses in the South planning to increase capital expenditure, dipping from +12% to +11% in 2013q1. This is a potential point of concern, if the trend persists.
More positively, the balance of companies increasing headcount over the past three months has improved; increasing from +11% in 2013q1 to +27%. This is above the average reported nationally of +11% in 2013q2.
