Business confidence falls in all but one UK region

Manufacturing News, Source : TheManufacturer.com
Published : 13 Nov 2002 9:27

Manufacturers' confidence has dipped in 10 out of 11 UK regions even though a majority are more optimistic about immediate prospects for orders and output.

That is according to the latest Regional Trends Survey, published by the CBI and Experian Business Strategies.

Only the East Midlands recorded an upturn in confidence about the general business situation. The biggest fall, by a wide margin, was in the South West.

The East Midlands also recorded a modest rise in export optimism and very positive expectations for output over the next four months. This could partly reflect the region's relatively large food-related sector, where output expectations remain robust.

But there was a marked erosion of confidence in the South West, which can be partly explained by its industrial make-up. Mechanical Engineering and transport are significant elements and these two sectors have experienced especially severe falls in confidence.

Several other regions saw fairly steep falls in confidence. After the South West the next sharpest was the East of England. This region saw the greatest decline in output over the past four months possibly reflecting the relative importance of electronic engineering there.

Looking ahead to the next four months, expectations that output will pick up were widespread. The North East and the East Midlands were the most positive on the back of an expected sharp rise in total orders, but four regions expected the decline in output to continue. Scotland and Yorkshire & the Humber were most pessimistic. They both expected orders and deliveries to remain severely depressed.

For the second successive survey the West Midlands was the only region where manufacturers expected to increase investment in plant and machinery. They also expected output to pick up over the coming months and employment to decline at a more moderate rate than at any time for the last 18 months.

Despite the more encouraging outlook for output, employment in most regions was expected to continue to contract sharply. The South East and London and Wales were particularly gloomy. They expected employment to go on declining at the steep rate of the past 18 months. But two regions expected employment to rise. A slight upturn was expected in Northern Ireland and the North East. This is the first survey time since 1999 that these regions have forecast an increase.

"After four years of almost continuous decline at the national level, it's encouraging that manufacturers in several regions expect orders and output to pick up slightly in the months ahead,” said Doug Godden, CBI Head of Economic Analysis. “But with profits under severe pressure, manufacturers will probably give priority to maximising productivity gains. It could be a long time before we see a return to widespread job creation in UK manufacturing, even if the most optimistic hopes are realised."

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