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6 June, 2017 - 13:56 By Tony Quested

East of England manufacturers thriving – home and away

Growth in world markets such as Asia, North America and Europe – aided by favourable forex headwinds – allied to more success at home have combined to give East of England manufacturers a continuing surge in performance.

New research on the sector from EEF and BDO providing a Q2 2017 outlook says businesses in the region are cashing in on “synchronised upswing in global markets.”

They cite a continued confidence that manufacturing will enjoy further quarters of output and expansion into the second half of the year. This defies predictions that political uncertainty caused by the snap election and Brexit may impact trade.

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 per cent) reporting positive demand conditions. This positive picture is reflected in the East of England, which has seen a strong pick-up in output after a slightly more muted manufacturing story last quarter. 

A balance of 38 per cent of companies saw output rise over the period, while a balance of 36 per cent of firms saw a rise in new UK orders from a flat start last quarter. 

Recruitment has also improved, with a balance of eight per cent of firms on a recruitment drive, while investment levels have also nudged upwards, with a balance of four per cent of companies increasing their planned capital expenditure compared to a negative balance (-11 per cent) last quarter.

Looking ahead to the next quarter, output is expected to remain strong with confidence in new orders holding steady. Employment intentions are expected to rise, with a balance of 25 per cent of firms saying they will be actively recruiting staff.

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. 

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.

Keith Ferguson (pictured above), partner and head of manufacturing at BDO in East Anglia, said: “The Q2 survey results present a very positive and exciting picture for manufacturing, showing increasing orders in both home and export markets.

“The continued growth in world markets such as Asia, North America and Europe are driving positive demand conditions. These results show yet again that manufacturing has the resilience and the qualities to form one of the foundations of a successful UK economy. 

“Brexit does create uncertainty and it is important that the new government is clear that Brexit will be structured in a way that serves the best interests of business. 

“As part of this it is vital that we remain open for business and negotiate new trade agreements with the EU and other key markets so that international markets remain open and accessible as soon as Brexit is completed.” 

• In response to the continued improvement in economic conditions EEF has revised its forecasts upwards. Manufacturing is now expected to expand by 1.3 per cent in 2017 and 0.5 per cent in 2018.

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