Light at the end of a dark tunnel for manufacturers

THE climate for manufacturers in the West Midlands appears to be improving, manufacturers’ organisation EEF has said.

However, confidence levels are still fractious and fears over the outcome of the EU referendum could torpedo growth hopes.

The first quarterly EEF Manufacturing Outlook survey of the year indicates that the sector’s slide into negative territory may be coming to an end. Improvements reported in output and orders and expectations of a further pick-up over the coming quarter offer welcome chinks of light.

But with risks still running high, the sector isn’t out of the woods yet.

In the West Midlands, manufacturers report that output has edged deeper into negative territory from the end of last year. However, this may not be for long with a net 22% of companies predicting positive output growth during Q2.

New orders give further grounds for optimism. The EEF said while these remain negative, the situation appeared to have stabilised comp0ared to the last quarter and looked set to move into positive territory during Q2.

Employment intentions also show signs of stabilising with the balance looking towards growing their workforce.

The story on investment isn’t quite so bright, with investment intentions among the region’s manufacturers still looking flat.

Richard Halstead, Midlands and East Region Director at EEF, said: “After the gloomy end to 2015, this latest data shows a chink of light. But, we should not be getting the deckchairs out yet. The slide is bottoming out, but manufacturing is still in negative territory and faces a precarious climb back up amidst a storm of real uncertainty. In a two-speed scenario, the fact that even those sectors in the fast lane are not relaxed about the global outlook probably says it all.
 
“What these findings make clear is that manufacturers face challenge enough – they certainly don’t need more pressure from domestically generated uncertainty or costs. Already almost four in ten identify rising business costs as a key risk this year, while the proportion of companies viewing the UK as a competitive place to do business has fallen from 70% in 2015 to 56% this year. We’re urging the Chancellor to take this message on board and signal support for the sector by avoiding creeping cost and policy changes at the next Budget.”