After a strong first quarter the six-month outlook for UK mechanical engineering firms is bullish according to the Engineering and Machinery Alliance’s March Business Monitor.
After a strong first quarter the six-month outlook for UK mechanical engineering firms is bullish according to the Engineering and Machinery Alliance’s March Business Monitor.
The report shows more firms reporting gains in enquiry levels than for the last three years. Order levels too are growing, albeit not as strongly as for prospects and enquiries.
Martin Walder, EAMA chairman said recent UK trade shows including IPEX and MACH for the print and manufacturing technology machinery sectors had shown there was a desire to invest.
“UK mechanical engineering companies had a good first quarter prospecting for business at home and overseas averaging double the levels of a year ago, so the outlook is very promising,” Mr Walder said. “But we mustn’t get ahead of ourselves.”
“While orders were up with the balances between the number of firms reporting monthly gains and losses improving markedly on Q1 2013, in fact by a half on UK orders and a third on exports, some of our subsectors are still having to manage lumpy order-books month on month.
“It’s true the business environment generally is much improved. Parts of the UK economy are even in something of a sweet spot, creating more jobs, while pay increases moderately ahead of low price increases. Many are seeing this in our sector and so confidence is high. For example, the Monitor reports sector businesses investing pretty firmly over the first quarter with 42% of companies saying they “are investing in all areas”. A year ago the figure was 23%.
“But we’ll understand much better how much more there’s still to do if we take a look behind the top line improvements for example on orders and compare the proportion of firms reporting monthly falls today with a year ago. This year ‘fallers’ averaged 23% over the first quarter both for UK business and for exports. A year ago the figures were quite similar at 29% for UK and 24% for export business.
“Another area where there has been some limited progress is round access to finance. Access to working and investment finance has long been subject to erratic monthly returns with gains in one month often followed by subsequent reversals. This year so far the returns have improved sufficiently to produce positive balances for the first time in a first quarter in any year since the crisis began in 2008. However, despite this good news there’s still a long way to go before we can say that access to finance issues have been resolved.
“Business seems to be well set but as a sector 60-70% dependent on exports and world trade now being such an interconnected supply chain activity it would be unrealistic to expect the next six-months to be completely surprise free. After all there are the EU and Scottish Independence elections.”
