Manufacturers in the South West have seen growth ease back to more moderate and sustainable long-term levels, according to the latest quarterly Manufacturing Outlook survey published today by EEF, the manufacturers’ organisation, and Bristol-based accountancy and business advisory firm, BDO LLP.
The data reveals orders are up on balance (12%) during the third quarter of the year, with output levels remaining static. A sign that this represents sustainable levels of growth, local manufacturers have raised recruitment intentions to a balance of +18% in Q3 and +6% in Q4.
The main area of caution is in exports, resulting in EEF issuing a warning that demand is now more uncertain than for some time. With the Eurozone economy flagging significantly, political risks increasing and a stronger Sterling exchange rate, export orders UK wide are turning negative for the first time since the start of 2013.
Looking ahead at the national picture, EEF is now forecasting 3.3% manufacturing growth by the end of the year, slightly down from the 3.5% forecast at the end of the last quarter.
John Talbot, at BDO LLP in Bristol, said: “Although these figures are more muted than previous quarters, the continuing trend of positive business performance is welcome news to our regional economy and jobs market.
“Manufacturers have successfully ridden out the economic storm of the last seven years so they understand how to effectively balance investment against expectations. There is nervousness surrounding overseas markets, so a strong recovery in exports this year is still uncertain. My concern is that companies will use that as an incentive to focus investment on domestic markets, which is not necessarily where long term sustainable growth will lie.”
Phil Brownsord, EEF South West Region Director, commented: “Growth in manufacturing remains positive but is now understandably returning to more moderate and sustainable levels as the pent-up demand which built up during the recession begins to expire.
“However, there are clearly increasing downside risks overseas which could threaten the pattern of growth going forward. In the face of this, while UK politicians may be focused on next year’s election it is critical that efforts over the rest of this parliament remain focused on sustaining growth across manufacturing and the economy.”