Global uncertainty dents manufacturing confidence

OUTPUT expectations among manufacturers recorded their steepest monthly fall in September since May 2013.

That’s according to BDO’s Business Trends report which linked the loss of confidence to weaker eurozone sentiment and the unstable global political situation.

The report’s output index, which predicts businesses’ growth expectations over the next three months, fell from 103.8 in August to 103.3 in September.

But there was a sharp fall of 1.6 points in the sub-index for manufacturers, which fell from 113.2 to 111.6. However, any figure above 100 indicates growth.

The inflation index fell for the fifth consecutive month to 96.6 in September – just above the 95.0 mark that separates inflation from deflation. In addition to falling commodity prices caused by disappointing global growth, prolonged low wage growth is limiting upward cost pressures on labour-intensive services firms.
But the employment Index recorded its 13th consecutive rise in September, with hiring intentions reaching a new post-crisis high of 112.3, up from 111.2 in August.

Tim Entwistle, partner and head of BDO in the North West, said: “With global conditions becoming increasingly challenging, it was only a matter of time before the stellar increases in economic growth recorded earlier this year came to an end. Given their reliance on exports, manufacturers have borne the brunt of weakening global demand but the effects of stuttering worldwide growth are obvious throughout the economy.”