Manufacturers report growing orders but lower margins

Posted on 5 Sep 2011 by The Manufacturer

Close to half of manufacturers have reported an increase in output and order levels over the past three months, according to a survey published today by EEF and BDO.

Despite recent negative reports, the EEF/BDO Manufacturing Outlook survey shows output and orders still growing. Almost 80% of the 440 manufacturing companies surveyed reported either static or increased order books and output for Q3, 2011.

In contrast, for the first time since the end of the recession, there has been a divergence of fortunes in some sectors. Metals and electronics order balances have weakened compared to the previous quarter but automotive balances continued to hold up with exports primarily responsible for the growth, said the report.

Investment intentions remain positive at +18% but this was concentrated at larger companies suggesting problems remain in accessing finance.

The survey also revealed the continued pressure on companies from higher input costs, especially energy and raw materials, with margins on UK and export balances the lowest since the first quarter of 2010.

EEF’s latest forecasts for manufacturing growth for 2011 and 2012 are 2.8% and 2.2%. This remains ahead of projected growth for the UK economy of 1.1% and 2.2%.