Manufacturing gathering pace

Posted on 4 Jun 2010 by The Manufacturer

A growing number of Britain's manufacturers reported buoyant trading conditions over the past three months on the back of rising demand.

The findings are according to a major survey published by EEF, the manufacturers’ organisation and BDO LLP.

The second quarter EEF/BDO ‘Manufacturing Outlook’ report reveals that the broad based recovery, which began at the end of 2009, has gathered pace. Output and orders balances hit a record highest levels since the survey began in 1995, indicating that manufacturing’s contribution to the recovery looks set to continue over the coming months.

Greater confidence across the sector is starting to translate into recruitment. However, investment balances continue to lag as uncertainty about the strength of future demand, availability of internal finance and concerns around business change taxes combine to keep plans on hold. But a package of tax reforms in the emergency budget that continues to support growth will go some way to alleviating concerns.

“The steadily improving trends in manufacturing look set to continue in the coming months and the upswing is being felt right across industry,” EEF Chief Economist, Ms Lee Hopley. “Manufacturers are pulling in more export orders on the back of a recovering world economy and a better outlook for the domestic market is giving companies some confidence to recruit again.

“But manufactures are very aware that economic headwinds could still pick up again as there are still risks to a sustained recovery. Great importance is now being placed on the need to rebalance the UK economy. In the short term this requires a Budget which delivers tax reform and deficit reduction in a way which provides some stability and gives manufacturers the confidence to invest.”

Tom Lawton, Head of Manufacturing at BDO, said: “These are a good set of results, especially as the manufacturing sector is still getting to grips with the uncertainty of the new coalition government. Manufacturers are now indicating that they want the government to deliver in five key areas: deal with the deficit, establish an environment that allows manufacturing to be competitive, provide specific support to mid-market manufacturers and create and support investment in emerging technologies but without forgetting the needs of the traditional manufacturer.