Service businesses outstrip ailing manufacturers – Chamber survey

A SLUMP in the fortunes of Greater Birmingham manufacturers is countered by an upsurge in the service sector, a survey from Birmingham Chamber of Commerce Group has revealed.

It suggests its last quarterly economic survey for 2012 underlines that the Government needs to act swiftly to inject growth into the manufacturing sector.

Sales at home and abroad were marked by a decline but the service sector fought back with increased global sales and orders.

The number of manufacturers reporting increased UK sales fell from 37% in the previous quarter to 33% and those with fuller order books dropped from 37% to 31%.

Some 37%, a fall from 45%, said export sales had increased while there was a marginal drop in those reporting increased orders – 35% from 36%.

Steve Brittan, president of Birmingham Chamber, said: “These figures are a concern and demonstrate that the Government must act on its promises.

“This is an extremely disappointing result especially when the previous quarter showed Greater Birmingham and the West Midlands outperforming the rest of the country.

“The trading environment has become much tougher and has slowed significantly since Quarter three. This underlines how vital it is that the Government acts on Autumn Statement announcements.

“A 100% tax relief on capital allowances is essential to boost manufacturing and the Government must press ahead urgently with their promised investment in infrastructure, which is vital for the construction industry.”

Brittan suggests there is a worrying trend in cash flow for manufacturers. Figures in the survey show only 16% reporting an improved cash flow compared with 31% in the previous quarter.

Low investment in plant and machinery and training also reflected the general lack of confidence among manufacturers.

The most marked improvement in the quarter was among exports for the service sector, which includes financial, legal and business services, hotels, catering, transport and communication.

Service firms reporting increased sales abroad leapt to 40% from 30% in the previous quarter while those showing increased orders went up to 32% from 27%.