Manufacturing recovery continues – EEF

THE Engineering Employers Federation (EEF) says Britain ’s manufacturers are continuing to report buoyant trading conditions on the back of rising demand in overseas markets, pointing to good prospects for growth in 2010.

The third quarter EEF/BDO ‘Manufacturing Outlook’ report reveals that recovery, which began at the end of last year, has been sustained with output and orders balances reaching record levels for the second quarter in succession. This performance continues to be driven by the strength of overseas markets, with new analysis published by EEF showing a close relationship between exposure to export markets and company performance.

Greater confidence across the sector is also continuing to translate into some recruitment, albeit anecdotally this is being driven by temporary or agency working which will give employers flexibility should demand begin to slow.

Uncertainty about future demand had been dampening investment plans, but a number of sectors are now planning to increase in investment. The positive investment intentions posted this quarter breaks the pattern of previous recessions by recovering at an earlier stage in the cycle.

However, the short-term optimism highlighted by EEF’s survey is shaded with a degree of caution about the risks to growth in 2011. As fiscal consolidation really gets underway in the UK and others follow suit, together with the weaker outlook for the US and risks to the sustainability of Asia’s growth path, the recovery could yet falter.

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