West Midlands manufacturers continue to benefit from upswing in global markets
Manufacturers in the West Midlands are continuing to enjoy a surge in performance on the back of a synchronised upswing in global markets, according to a new report.
The latest second quarter survey today from EEF, the manufacturers’ organisation and accountancy and business advisory firm BDO, points to a continued confidence that manufacturing will enjoy further quarters of output and expansion into the second half of the year.
Publishing the Q2 2017 manufacturing outlook survey, EEF said the findings were in spite of response balances easing slightly from the results of Q1, defying any predictions that political uncertainty caused by a snap election and Brexit may impact on business conditions.
While the export performance does have a currency aspect to it, the survey showed that manufacturers’ views of demand prospects in exports markets have become steadily more positive over the past twelve months.
Demand in European markets looks especially buoyant with over three-fifths of companies nationally (61%) reporting positive demand conditions.
The positive picture is reflected – even exceeded – in the West Midlands where a balance of 44% of firms have continued to see output grow, matching last quarter’s figures which outstripped manufacturers’ own high expectations.
Order books too lived up to last quarter’s highs, with a balance of 43% of companies seeing their order books expand.
In fact, when it comes to order books, West Midlands’ manufacturers continue to lead the way, outpacing all other UK regions.
Employment is slightly down on expectations, with a balance of 24% of firms recruiting in the last quarter, against an expected balance of 34%. Investment intentions are also down from last quarter, with a balance of 18% of firms planning to invest more, compared to a balance of 29% last quarter.
Looking forward, manufacturers expect output and orders to dip, in part driven by a downturn in the automotive industry, with the tendency of consumers to cut down on spending for big-ticket durable items like cars when incomes are squeezed.
A balance of firms expect orders to fall from 60% to a balance of just 21% of companies expecting orders to increase.
The survey also showed that, in contrast to recent years, positive output balances were reported across all sectors nationally.
However, those in the capital goods sector are performing especially well as global manufacturing intentions have increased. A good pipeline of orders across the industry is pushing up demand for new employees and recruitment intentions soared to the highest level in three years, whilst investment intentions were in positive territory for the third quarter in a row.
EEF warned, however, that the current sweet spot for the sector cannot be guaranteed given the uncertainty ahead, in particular the likely continued squeeze on household incomes and possibility of no deal on Brexit which could hit trade.
In response EEF is urging the new Government to press ahead as a matter of urgency with a bold industrial strategy to help cement long-term growth prospects for the sector.
