Q4 manufacturing demand weakens
A MANUFACTURING outlook survey has shown demand continuing to weaken in the final three months of the year.
Sentiment turned negative in both orders and output in the last quarter (both down to a balance of -6% of companies) as the weakening conditions seen through the course of this year finally took their toll, according to the the EEF/BDO Q4 Manufacturing Outlook survey.
In particular, the continuing crisis in the eurozone impacted heavily as those companies with a greater share of their exports into the EU were most negative.
However, the survey also showed on a more positive note that output and orders are forecast to pick up in the first quarter of next year to a balance of +7% and +13% respectively.
In addition, demand for skilled staff continues with recruitment intentions holding up, with a balance of +6% of companies increasing employment. In the next quarter, the figure is even stronger with a balance of +23% of companies planning to recruit which shows firms should be in a position to take advantage of stronger demand when it picks up.
David Ost, EEF North West region director, said: “We’ve seen growth ebb away during the course of the year and many manufacturers are steeling themselves for a continuation of tough trading conditions in the next few quarters. The weakening of export demand is particularly worrying given the hopes we had placed on trade driving economic growth and rebalancing.”
Philip Storer, partner at BDO, said: “The reduction in exports is a particular concern and, whilst this mostly reflects the turmoil in the eurozone, it also highlights the scale of the challenge in growing exports to emerging markets to offset the downturn in much of Europe.
“On a more positive note, investment intentions seem to be defying gravity but the ongoing issues around access to capital and an unsupportive tax structure may yet have a serious impact on actual investment. This survey shows that the sector is nowhere near where the government wanted it to be two years ago and emphasises the need for a long term industrial policy focused on manufacturing.”
