Britain's manufacturers are optimistic after EEF reported the sector's strongest output and orders balances in a year.
The Manufacturing Outlook survey published jointly by the manufacturers’ organisation and business advisers BDO gives cause for optimism, revealing broad based improvements and expectations that the sector will see more positive news in the second half of the calendar year.
12% of companies questioned reported an increase in output over the past three months, the strongest figure since 2012 and up from -1% in the previous quarter.
Basic metals was the only sector to see a fall in output orders over the three month period.
Orders balances also returned to positive territory, both at home and in overseas markets, with a balance of 3% and 1% of companies seeing increased orders respectively over the past three months.
Lee Hopley, chief economist at EEF, said: “Positive manufacturing data has been somewhat easier to find in recent months and our latest survey provides further confidence that the sector’s prospects are improving.
“While the demand environment in major European markets remains weak, and some individual industrial sectors are facing their own specific challenges, the improvement in output and positive expectations on orders bodes well for growth going into the second half of the year.”
Tom Lawton, head of manufacturing at BDO, agreed there was a positive mood but warned that recovery remains ‘tentative’.
“There seems a definite lightening of the mood amongst manufacturers supported by positive order balances. However, recovery in the sector still remains tentative, clearly illustrated by firms’ reluctance to commit to future investment plans.”
The report remained cautious about certain aspects of manufacturing with investment balances falling to their weakest level since 2010.
The EEF said it expects a decline of 0.5% in manufacturing this year with the latter parts of 2013 expected to be strongest.
Ms Hopley added words of caution: “The relative weakness in export orders and the softening in investment intentions suggest that confidence may still need to be tempered for now.”