Good vibes for recovery

Posted on 10 Aug 2009 by The Manufacturer

Confidence among British manufacturers over upcoming business prospects has risen sharply with increased demand, output, profit and recruitment expected over the coming year, according to the latest survey by financial services firm KPMG.

While optimism is high across the European Union, firms in the UK join those from Italy as the most confident, according to the bi-annual KPMG Business Outlook Survey.
The UK is the only country in the EU that expects positive recruitment figures over the coming year, with a balance of +7.1. France and the Netherlands expect the biggest culls (-26.1 and -23.9) while the balance for the EU overall is -13.9. The UK also regards its prospects for increased profits the most highly with a balance of +36.0 compared to just +7.1 for EU as a whole. This latter figure compares very favourably with the -26.8 registered in the last survey, carried out in January, though.

The net balance for all EU output rises to +28.0 from the -10.2 registered in last winter’s survey. But again the UK comes out on top in terms of optimism, with an output balance of +53.8

Revenues across the EU are expected to rise (+18.8), as will input prices (+8.1). Output prices are expected to fall (-5.2), reflecting competitive pressures.

EU manufacturing as a whole expects to return to growth mid next year.

“There is plenty of reassurance to be taken from such a return to optimism amongst manufacturers in Europe’s industrial heartlands,” said global head of advisory at KPMG, Alan Buckle. “The UK and Italy may have led the way in terms of sheer optimism but the fact that so many of their neighbours have posted swings of 30 to 40 points back into more optimistic territory must surely bode well for the future – as does the fact that inflation indicators appear muted.”

But not all areas are sitting pretty just yet, warned Buckle, “the fact that optimism is far less in evidence around the prospects for improved revenues tells us there is still some way to go on the road to full recovery.” Sentiments are indeed still some way short of pre-crisis levels.

Buckle said manufacturers must now ensure they have the infrastructure in place in order to fully benefit from the upturn. “In time, those that failed to foresee what was a very dramatic downturn will likely be forgiven,” he said, however, “history may be less forgiving of those who fail to prepare for the recovery.”

The accountants also revealed that manufacturing firms in the world’s leading emerging markets are also highly optimistic about strong future demand. Known collectively as BRIC, the countries in this group are Brazil, Russia, India and China.

Expectations from manufacturers in those countries are almost up to the same level they were this time last year. The net balance for business activity is at +46.5 from +3.6 last winter. Last summer it posted +47.

Of the four, Brazil is the most upbeat.

The EU survey comprises 3,700 manufacturers while the BRIC includes 1,800.

EU outlook