East of England: Region’s manufacturers remain resilient, says EEF/BDO survey

THE East of England’s manufacturers are remaining resilient and continuing to take advantage of growth in emerging overseas markets, according to a new survey.

Both output and orders have remained in positive territory within the region in the past three months, according to the latest quarterly EEF/BDO Manufacturing Outlook Survey from manufacturers’ organisation EEF and business advisers BDO LLP.

The balance of firms reporting increases in output and orders over those reporting declines were plus 41% and plus 35% respectively, the best for any UK region.

Continuing economic uncertainty and fears over the eurozone economy have taken their toll on confidence, with expectations for output and orders over the next three months more or less flat.

But the outlook for job prospects in the sector remains positive, with recruitment intentions remaining positive for the next three months although slightly weaker than for the previous quarter.

Nationally, EEF is forecasting a small year-on-year contraction for 2012 of minus 0.1% but, barring further shocks to the economy, it expects manufacturing growth of 2.2% next year.

Jim Davison, regional director at EEF, said: “Manufacturers are holding steady and displaying the resilience and agility they have displayed in response to a number of unforeseen events in recent years. Despite the problems closer to home they are building on successful strategies to access growth opportunities in new markets.

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“However, the main risk to activity is still rooted in the on-going eurozone crisis. While the growing political and economic uncertainty in the region has not significantly dented confidence as yet, it is far from clear what or when the end game might be. This could delay positive investment intentions being translated into a sustained recovery in capital expenditure, at least in the short term.”

Jamie Cassell of BDO LLP added: “The results from this latest survey show that UK manufacturing remains surprisingly resilient in the face of the combined headwinds of renewed eurozone uncertainty and a very tight lending market.

“Exports seem to be holding up reasonably well supported by increasing trade with emerging markets which may well be critical as the Eurozone continues its downward spiral.

“Over the next few years the success of the sector will almost certainly depend on how quickly we can switch our export focus to the emerging growth markets and this will require a shift in thinking amongst many manufacturers.

“The results also show that the economic uncertainty appears to be hitting smaller companies hardest, causing cash flow problems amongst those with the shallowest pockets.

“Measures to help protect and support these companies must be made a priority or else we face the prospect of losing the type of innovative engineers for which the UK has become globally renowned.”