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Manufacturers defy gloom by maintaining growth: Britain's manufacturers are maintaining healthy growth according to a major survey.

Britain's manufacturers are maintaining healthy growth according to a major survey published by EEF, the manufacturers' organisation, and BDO LLP

Despite recent negative sentiment, the EEF/BDO Manufacturing Outlook survey shows output and orders still growing, with all sectors reporting positive activity in the last three months. Exports remain the main driver behind growth with the gap between overseas and markets still evident.

However, as the economic outlook has become more uncertain, a divergence in views of recent trading conditions and future expectations has opened up. A small number of sectors, including metals and electronics, have seen weaker orders intake over the past three months, with corresponding concerns about output expansion evident in the next three months.


In addition, the balance between caution and optimism appears to have shifted for small companies looking at conditions over the next quarter, where less visibility around future orders is keeping confidence in check.

Commenting, EEF chief economist, Ms Lee Hopley, said: "Manufacturers have bucked other recent negative indicators, holding out hope that the recovery has not yet run out of steam. Across much of the sector companies are still busy and orders are holding up, particularly from overseas markets. However, conditions have moved on from the broad-based recovery seen over the past 18 months to a more mixed picture, especially around the short-term outlook. The growing challenges in the global economic environment, in particular, are casting a shadow over expectations and seem to be giving some companies pause for thought when it comes to investing and recruiting. But there is cautious optimism that growth will continue through the rest of the year.'

Tom Lawton, head of manufacturing at BDO LLP, said: "Despite the economic storm clouds looming in the Eurozone, the US and the UK, this was a strong survey for the manufacturing sector, showing positive balances In terms of orders and outputs in the last quarter and expected In the next. However, it is Interesting to note the stark differences in expectations between small and large companies, with smaller companies seeming considerably less secure about the future.

"The economic turmoil in some industrialised economies is a cause for concern amongst all manufacturers. In particular, companies will be worried about how their order books will look in the coming months, as well as their prospects of recovering debt on sales already made. But whereas a large company may be in a better position to offset losses, to a smaller company the loss of an Important customer can be a business critical event. In addition, smaller companies may feel less confident about the future due to the relatively short-term nature of their order profiles, giving them less visibility over future orders.

"We have seen how SMEs in Germany - the Mittelstand--have been the catalyst for German economic growth. We should not forget how important SMEs are for a strong economy - and we should ensure our smaller manufacturing companies are given the support they require to thrive and continue to be an active part of this sector."

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Publication:Plant & Works Engineering
Geographic Code:4EUUK
Date:Sep 1, 2011
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