Despite recent reports to the contrary, EEF states in its third quarterly ‘Manufacturing Outlook’ report that the industry’s recovery is continuing at record pace.
EEF, which presents the quarterly report in conjunction with business services firm BDO, says orders and output are at record levels of improvement for the second successive quarter. Balances of +33% and +35% respectively each represent growth margins not witnessed since the series first began in 1995. This has largely been attributed to strong export performance which registered a balance of +30%.
The growth was more or less consistent across all sub sectors of manufacturing.
What’s more, businesses report that they are now beginning to recruit again, albeit on a temporary basis to allow flexibility, and some sectors say they now intend to invest again. EEF says the positive investment intentions posted this quarter breaks the pattern of previous recessions by recovering at an earlier stage in the cycle.
There are still fears that tightened budgets as we enter our age of austerity could cause the recovery to falter though.
EEF chief economist Lee Hopley says: “Manufacturers have continued to reap the rewards of growth in overseas markets with the upswing being felt across all sectors and regions. Not only has this continued to translate into better employment prospects but the recovery in investment has begun much earlier in the cycle than after previous recessions.
“However, we have to maintain perspective that the recovery is coming from a very low base and the risks to the economy in the medium term haven’t gone away. The rebound in exports and modest improvement in investment will need to become much more firmly entrenched if we are to see a much-needed rebalancing of the economy.”
Businesses are by and large positive about their prospects going forward. A balance of 27% expect output to increase in the next three months, and 22% expect orders to expand.
EEF now expects the economy to grow by 1.5% this year and 2.1% in 2011 and manufacturing to grow by 3.7% in 2010 and 3.2% in 2011.