MANUFACTURERS are enduring a difficult end to the year in the face of gathering gloom from the global economy, analysis by EEF and DLA Piper has found.
The Q4 survey shows further deterioration in most of UK manufacturing’s key indicators confirming that, after a big step forward in growth in 2014, industry has taken a step back this year.
The gloomy outlook has prompted the first negative forecast for employment and investment in almost six years.
Output and orders have weakened in Yorkshire, with a balance of just 6% of manufacturers having seen an improvement in output this quarter, down from 21% in Q3.
Andy Tuscher, Yorkshire and Humber Region Director at EEF, said: “The prospect of manufacturing growth this year has all but faded away with another disappointing set of indicators from our survey. The downbeat mood may not be universal across all industry sectors, but in the face of mounting challenges it seems to be spreading and companies in this region are certainly not immune.
“The impact on manufacturers’ employment and investment plans suggests that these clouds will be hanging over us as we go into next year. While the Chancellor’s recent Spending Review will have been seen as supportive to industry, it is critical that Government continues to act to ensure that the UK is a competitive location for manufacturing.”
As a result of the weakening position, EEF has revised down its growth forecasts for this year and next. Manufacturing is forecast to contract by 0.1% this year and recover slightly to grow by 0.8% in 2016. EEF is forecasting GDP growth of 2.4% in 2015 and 2.1% in 2016.
Although performance relative to the rest of the UK is holding up fairly well, manufacturers in the region do not seem to be feeling any more optimistic about the economy than their peers elsewhere. Confidence about their own business performance in the year ahead is looking slightly stronger, but still sees firms in the region coming mid-table, with Wales and the South East leading the way.
Across the UK, manufacturing’s concerns about world trade growth and weakening demand from both developed and emerging markets have become more pronounced. The domestic market is also looking considerably less supportive than in recent years, although some bright spots remain, in particular motor vehicles, aerospace and chemicals.
The lack of growth prospects in export markets is especially marked and, after a brief improvement, manufacturers’ confidence in Europe has started to wane again.
Investment and recruitment intentions have both turned negative for the first time since Q1 2010. Employment in particular has been affected by the build- up of spare capacity in sectors supplying oil and gas, while job losses in the steel industry have impacted on prospects for the metals sector.
