Manufacturing industry faces ‘challenging’ times

SPARKS Concerns over manufacturing
SPARKS Concerns over manufacturing
A picture taken inside the Decathlon store at Portsmouth Retail park. Credit: Decathlon UK

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MANUFACTURERS in the south of England are reporting ‘challenging’ conditions amid growing economic uncertainty according to a survey.

In the last three months, the region’s manufacturing output and total orders have both declined, with a 24 per cent negative swing in both measures, with the balance between companies showing positive and negative results now standing at -14 per cent.

Unsurprisingly, recruitment has weakened, with employment trends now standing at -14 per cent compared with positive indicators three months ago.

Looking forward, prospects are also gloomy as companies in the south are expecting falling output and orders in the next quarter, says the Q4 2011 ‘Manufacturing Outlook’, published by EEF, the manufacturers’ organisation.

This increasing economic uncertainty is reflected across all UK regions and, as a result, EEF has downgraded its forecast for manufacturing growth for 2012 to just 0.9 per cent, down from its previous forecast of 2.2 per cent.

Jim Davison, EEF region director in the south, said: ‘Manufacturing has been a key pillar in the recovery so far and it looks like the sector will still end the year on the up with positive output and order responses posted over the past quarter.  However, short-term confidence has all but fallen away. 

‘The signs of caution that had been emerging through the second half of this year have clearly become more entrenched as global growth concerns have escalated. There are not only question marks over wider manufacturing prospects at the beginning of 2012, but also the exports and investment needed to underpin sustainable growth.’

Paul Duckworth, manufacturing director at accountancy specialists BDO in Southampton, said: ‘Although exports have maintained a relatively strong performance in the quarter the continuing problems within Europe, which is by far our biggest export market, are clearly having an effect and generally increasing a feeling of nervousness and lack of confidence.

‘However, despite this gloom manufacturing looks set to perform well in relation to other parts of the UK economy in 2012 and we would strongly encourage the government to increase the momentum of support for the sector in order to help rebalance and boost the economy. It seems clear that manufacturing has to be at the centre of the government’s future growth plans.’

The survey was conducted between November 3 and 28, with 453 companies responding.