Figures from the Engineering and Machinery Alliance reveal that while employment in mechanical engineering companies has risen, orders and investment are beginning to fall.
The EAMA’s Monthly Business Monitor (MBM) reported that 52% of mechanical engineering companies recorded lower orders in June than in May, when the figure was 21%.
This is the first time since August 2011 that the percentage of companies recording a lower amount of orders than the previous month has risen above 33%.
The MBM covers 1,700 firms across 12 trade associations including the Manufacturing Technologies Association, the British Plastics Federation and the Processing and Packaging Machinery Association.
Martin Walder, EAMA chairman, said that events such as the Queen’s Jubilee have interfered with trade: “June would normally be one of the busiest times of the year, with strong signs for business in the third and fourth quarters. This year of course it was affected by several public holidays at the beginning of the month.”
However, the MBM did reveal that 23% of firms will need to increase their workforce, a 3% rise on May. 64% of firms said that their workforce would remain the same and 13% said there would be a decrease in employees.
13% of companies have stopped investment (the highest number in over two years); 14% of companies said that their investment plans have been deferred and 29% said that they are not committing to the projects they have invested in.
Mr Walder said that the decrease in investment was linked to careful planning: “The investment indicators are more about conserving cash, having plans in place and waiting to see how economic opportunities are going to pan out over the remainder of the year.”
He added: “Confidence is certainly weaker than it was earlier in the year. Although the government is trying to encourage growth with many different initiatives there are almost too many of them to gain traction. Companies need time to understand what’s relevant and where to go, particularly SMEs.”