Manufacturing in the south west continued its strong recovery over the last three months, according to the latest survey published by EEF, the manufacturers’ organisation, and BDO LLP.
The survey shows that manufacturers in the region are continuing to enjoy good trading conditions on the back of strong demand in overseas markets, pointing to solid prospects for growth for the rest of the year.
Among South West manufacturers:
• 80% reported stable or increasing total new order volume
• 84% maintained or increased total output
• 86% recorded stable or stronger export markets
Greater confidence across the sector is also continuing to translate into some recruitment, albeit anecdotally this is being driven by temporary or agency working which will give employers flexibility should demand begin to slow.
Uncertainty about future demand had been dampening investment plans, but a number of sectors are now planning to increase in investment. The positive investment intentions posted this quarter breaks the pattern of previous recessions by recovering at an earlier stage in the cycle.
However, the short-term optimism highlighted by EEF’s survey is shaded with a degree of caution about the risks to growth in 2011. As fiscal consolidation really gets underway in the UK and others follow suit, together with the weaker outlook for the US and risks to the sustainability of Asia’s growth path, the recovery could yet falter.
Commenting, Clive Turner, Head of External Affairs for EEF in the south west, said: “Those south west manufacturers with overseas markets have continued to reap the rewards of continued growth in demand over the last three months – Europe in particular turned out to be stronger than expected.
“However, we have to maintain perspective that the recovery is coming from a very low base and the risks to the economy in the medium term haven’t gone away. The rebound in exports and modest improvement in investment will need to become much more firmly entrenched if we are to see a much-needed rebalancing of the economy.”
