Mixed picture for region’s manufacturers

West Midlands manufacturers saw a mixed picture in the final months of the year in response to a number of factors related to Brexit uncertainty, weaker global growth and the impact of protectionist policies.

According to a survey published today by EEF the manufacturers’ organisation and business advisory firm BDO relating to the fourth quarter of 2018,
output grew to a balance of +24%, similar to the levels seen earlier in the year and above the long-term average.

Domestic orders however fell sharply to a balance of +5%, while export orders, which have been a big driver for manufacturing in recent years drifted down in line with the national picture to a balance of +15%.

This mixed picture for the West Midlands is reflected by the fact that while recruitment plans increased to a balance of +24% after two weak quarters, by contrast investment intentions fell to a balance of zero, more or less in line with the national picture.

Whilst EEF has revised upward its growth forecast for manufacturing for 2018 from 0.9% to 1.1% as a result of the weaker outlook and uncertainty it has downgraded its forecast for 2019 to just 0.3% from 0.5%. GDP forecasts remain unchanged for 2018 and 2019, both at 1.3%.

Charlotte Horobin, region director for EEF in the Midlands Region, said:  “The moderation in manufacturing performance over the course of this year was not unexpected but in the final quarter there are more clouds on the horizon than there have been for some time.

“This should come as no surprise given the significant political uncertainty at home which is why it is essential that there is an agreement for the UK’s withdrawal from the EU as soon as possible. If everything that can go right does then business and consumer confidence should hopefully gather some steam next year with improved prospects for growth. That’s the backdrop we’re working to, let’s hope it’s the right one.”

Jon Gilpin, partner and head of manufacturing at BDO in the Midlands, added:

“Manufacturers in the West Midlands have remained reasonably confident over the course of the year but the decline in orders and lacklustre investment intentions highlight that uncertainty is taking its toll on future growth. In addition, the decline in export orders – which are in line with the national average – is a cause for concern.

“Overseas demand has helped sustain manufacturing growth over the last few years and the EU remains the most important trading block for West Midlands manufacturers. It is crucial we are seen to be open for business with the EU and other key global markets. The result of the ‘meaningful vote’ next week will dictate the government’s next steps and hopefully provide some much needed certainty as we enter the new year.”

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