There are signs that the impact of the recession on manufacturing in south west
England is beginning to stabilise.While the latest survey from EEF, the manufacturers’ organisation, shows a
further decline in overall output, 21% of businesses do report an increase in
new domestic orders and there appears to be a slight improvement in cashflow and
a greater willingness to invest in capital expenditure. Manufacturers in the
south west also expect a slight improvement in trading conditions in the next
three months and the region remains the most stable of any in Britain in terms
of employment.“Overall, the effects of the recession appear to be levelling out,” says Clive
Turner, External Affairs Advisor for EEF South West Region. “The weakness in
world markets has hit the sector hard, but it looks like manufacturers are now
close to the bottom of the cycle. However, big question marks remain about when
we will see any substantive signs of a recovery in demand.”Key results
· Over half of south west manufacturers reported lower total output in the
last three months
· There was slight improvement in new UK orders, with 21% reporting an
increase, but new overseas orders worsened overall
· Although jobs continue to be lost, the south west is the most stable for
employment of any region in Britain, with around seven in 10 respondents
reporting no change or gains in numbers employed
· Price cutting picks up and margins squeeze continues
· Forecasts show a return to growth in 2010.Clive Turner added: “While there may be some brighter spots on the horizon, the
government cannot afford to think its work is done and lose focus on the
economy. While companies are preparing for the upturn, government and the Bank
of England need to ensure they can access the support they need from banks and
credit insurers.”Looking to the next three months, almost all sectors are less pessimistic about
output and orders from both domestic and overseas customers. In the south west,
a balance of 14% of companies expects further output falls next quarter,
compared with 27% in the first quarter.Looking forward to the rest of this year and next, although the outlook has
stabilised, the sharp fall in activity in 2009q1 has led EEF to downgrade growth
forecasts for 2009. It expects manufacturing output to fall by 11% in 2009, in
which a return to growth in 2009q4 precedes a modest recovery of 0.4% growth in
2010. Engineering output is forecast to decline by 17.5% this year and by 0.8%
next year.
