A new BDO survey found optimism among British manufacturers plummeted for the month of March, as weak consumer demand continued to hurt confidence.
The accountancy firm’s business trend report found optimism fell from a reading of 94.5 in February to 88.2 in March, while in a further blow, the firm’s Output Index also declined from a reading of 94.1 to 92.4.
It stated manufacturer confidence has been hit by the depreciating value of sterling, coupled with weak demand from domestic consumers and the continuing struggle eurozone import partners.
In more positive news, the BDO Employment Index hit a 19-month high, indicating a recovery in the hiring intentions of the private sector.
Peter Hemington, partner at BDO LLP, said that while it is encouraging to see an improvement in UK businesses’ hiring intentions, plunging manufacturing confidence remains a cause for concern.
“A fundamental part of the Coalition Government’s “ re-balancing” strategy is the encouragement of UK manufacturing,” he said.
“So, it was disappointing to see little action taken in last month’s budget to help this beleaguered sector. In particular, a time limited increase in capital allowances would have been a good step to take in order to encourage the manufacturing industry to invest and grow.”
The index, which measures hiring intentions over the next two quarters, reached its highest level since August 2011 by hitting 96.0, the third consecutive month above 95.0 and indicating solid employment growth.