West manufacturers have beaten the downturn by reporting a significant increase in orders and employment during the first three months of this year.
And the positive trend looks set to continue with more manufacturers predicting a rise in output, higher orders and – vitally for the area’s economy – additional jobs.
The upbeat picture comes from a major survey released today by the manufacturers’ organisation EEF and accountants and business advisers BDO LLP.
A balance of 20% reported an increase in orders with a balance of 18% saying they had increased headcount in the quarterly Manufacturing Outlook survey.
Looking ahead, a balance of 35% are predicting higher output, 18% an increase in orders and 9% a rise in employment in the second quarter.
This shows far greater confidence than expressed during the fourth quarter of 2011 when a balance of just 13% predicted increased output and no companies forecast increased orders or recruitment.
EEF regional director Paul Knight said: “Manufacturing indicators hit a soft patch at the end of last year as events in global markets weighed on confidence and held back orders growth in some sectors. But our latest survey confirms this was a temporary setback rather than the beginning of a more a worrying trend for both the sector and the economy more widely.
“The confidence shown in our survey again demonstrates the resilience of manufacturing in the face of a changing global outlook. But while this is feeding through to a continuing willingness to recruit and invest, there is still more that needs to be heard from government to ensure that this investment proceeds and generates much needed growth.”
The EEF/BDO survey also highlighted a notable improvement in UK demand with the balance of manufacturers reporting an increase in domestic orders on a par with export orders.
John Talbot, manufacturing specialist at BDO in Bristol, said: “South West manufacturers seem to be reassured by strengthening output and forward order books, and are looking forward to the next three months with far more confidence.
“The shock from the Eurozone delivered last year seems to be subsiding and domestic demand has caught up with exports – the main driver of growth last quarter – to provide a more secure foundation on which to establish a sustained period of steady, albeit slow, growth.
“Economic indicators in the region are improving and positive industry news this week will certainly help crystallise this optimism. However, the ongoing fragility in UK and European banking systems and economies, the lack of access to capital for SMEs and a widespread concern over a skills shortage continue to present longer term challenges for the sector.
“It is important to the overall recovery of manufacturing and the UK economy for the government to recognise the opportunity that improving sentiment in the sector presents and to do everything it can to support and nurture this growth. Initiatives such as those that led to the creation of the new National Composites Centre in the Bristol & Bath Science Park are exciting step forwards; although clearly there is a lot still to be done.”
Incorporating the weak end to 2011 and the continuing volatility in the global economy, the EEF’s forecast for growth was revised down to a muted 0.5%. However, some regained momentum will translate into stronger growth of 0.8% in 2012. Across the economy as a whole the EEF expects GDP to expand by 0.2% in 2011 and 1.8% in 2012.
