Optimism in manufacturing falls

Posted on 7 Jul 2014 by Victoria Fitzgerald

Challenging operating conditions have resulted in a drop in optimism among UK manufacturers for the first time in 14 months, according to a report released today by accountants and business advisers BDO LLP.

The BDO Optimism Sub-index for the manufacturing sector, which outlines growth expectations in six months’ time, decreased from 121.0 in May to 119.5 in June.

Despite maintaining a figure above the 100 mark, which signifies a long-term growth trend, the fall reveals manufacturers are taking a more cautious position on challenges like rising operating costs.

BDO LLP partner, Peter Hemington said: “UK manufacturers are under growing pressure from a shrinking pool of skilled workers and potential input cost increases, but confidence in the sector is high and firms are still looking to expand well above their long-term trend rate over the next six months.

“This month’s dip in confidence is a rational response to the issues that businesses face and nobody should have expected the stellar growth we’ve seen in manufacturing so far this year to go on forever.

“But we still don’t know when interest rates will rise and businesses cannot plan for growth on the basis of vague or conflicting statements – policy makers can do more to provide certainty for businesses, enabling them to make informed decisions for the future.”