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Manufacturing surges as recovery takes hold
Manufacturers across the south are experiencing a surge in activity as the long-awaited recovery begins to take hold, according to a major survey released last month by EEF, the manufacturers’ organisation, and accountancy and business advisory firm BDO LLP.
According to the quarterly ’EEF/BDO Manufacturing Outlook’ survey*, a balance of 57% of companies in the south reported increased output, up from 18% in the past quarter and the highest level in 15 years since the survey began.
Order balances were also better than expected with 31% experiencing an increase; significantly higher than the 15% previously forecasted for Q3 2013.
Regional manufacturers appear confident that the positive trend will continue into Q4, with a balance of 38% and 40% forecasting output and orders to increase respectively in the run-up to Christmas.
The improved outlook is also translating into better job prospects, with a balance of 34% increasing headcount in Q3 compared to a forecast of 16%. A balance of 17% is expected to continue recruiting in the final quarter of the year.
This quarter the rebound is being led by a stronger domestic market which has often lagged behind exports. But conditions in overseas markets have also picked up with the balance of companies seeing growth in export sales rising to a two-year high in the past quarter. In line with recent official statistics the upswing in output is broad-based across all sectors.
Investment intentions have also increased across the region to 41%, compared to 13% (Q2) and -3% (Q1). UK-wide, there are signs that investment performance may finally begin to regain ground lost in the past three years with investment intentions, especially among SMEs, escalating sharply to some of the highest levels seen in the survey’s history.
This is critically important if we are to see a rebalancing of the economy towards net trade and investment, and avoid relying on the consumer and the housing market to drive the economy forward.
Commenting, Jim Davison, EEF region director, said: “Industry’s prospects have brightened considerably in the past few months. There is growing confidence that improving trading conditions will continue into the final months of this year and then accelerate through the gears in 2014.“
Arbinder Chatwal, manufacturing specialist at BDO LLP in Southampton, said: “A domestic market at its strongest for almost three years, backed by export sales at a two-year high, means manufacturers across all sectors and throughout the supply chain are feeling the benefits of an impressive return to confidence.
“The positive change in investment intentions is a powerful and important indicator, and key to the future growth and positioning of the sector in the regional, domestic and global markets.
“But let’s reiterate, this is not ’manufacturing sector – job done’ for the Government. We must use it as a strong foundation for continued efforts to ensure the sector gets the support it needs to act as an engine of change for our economy.“
The more positive economic data for manufacturing in recent weeks has caused EEF to upgrade its forecasts for the economy and manufacturing for 2013 and 2014. The economy is forecast to expand by 1.2% (1.1%) this year while manufacturing is expected to contract by 0.5% (0.7%). However, next year growth is expected to accelerate with the economy growing by 2% (1.8%) and manufacturing by 2.1% (1.9%).
* The survey was conducted between July 31 and August 21 with 290 companies responding.
Solent delegates speak up on how €43m EU funds should be spent
A total of 120 delegates from businesses and organisations across the public and voluntary sectors gave their views on how €43m of European Union funding should be spent in the Solent in the next seven years.
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The event, which was held at the National Museum of the Royal Navy at Portsmouth Naval Base by the Solent Local Enterprise Partnership last month, is part of a broad consultation to help develop a strategy to make the most of the available funds. The money from the EU
Structural and Investment Fund is designed to drive growth in the region between 2014 and 2020.
Delegates discussed where they thought the money would be best spent across a range of sectors including skills, SMEs, innovation, low carbon, employment, ICT and social inclusion. The debate produced a wide range of views and opinions, which will now be collated by the LEP and used to inform production of the strategy.
THE BUSINESS MAGAZINE – SOLENT & SOUTH CENTRAL – OCTOBER 2013
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