Manufacturing growth in East of England falls short of expectations

From left, Jim Davison of EEF, Keith Ferguson of BDO, Paul Nelson of Barclays, and Paul Sparks and

From left, Jim Davison of EEF, Keith Ferguson of BDO, Paul Nelson of Barclays, and Paul Sparks and Stephen Cooney, also both of BDO, at the East Anglian Manufacturers Forum event in Ipswich. - Credit: Archant

Manufacturers in the East of England have reported weaker than expected growth during the second quarter of the year, according to major sector survey.

The latest Manufacturing Outlook survey, published quarterly by manufacturers’ organisation EEF and international law firm DLA Piper, reveals a loss of momentum compared with the start of the year, with companies reporting weaker growth in areas including output and orders.

In the survey for the first quarter, a net 40% of the region’s manufacturers saw output increase and 34% predicted further growth in the second quarter but this failed to materialise, with output remaining unchanged overall.

The picture on orders was even gloomier. In the first quarter a net 33% of manufacturers in the eastern region reported growth in orders and 28% expected this to be repeated in the second but in the event a balance of 11% reported a decline.

With the regional findings broadly in line with the UK as a whole, EEF has softened its 2015 manufacturing growth forecast to 1.5%, down from 1.7% previously.

The results of the EEF survey are largely in line with the latest monthly edition of the CIPS/Markit Purchasing Managers’ Index (PMI) survey for the manufacturing sector which today showed a lacklustre performance for the sector during May.

The index reading of 52 – any reading above 50 indicates growth – was only slightly up on the April figure of 51.8 which was the lowest recorded by the secod for seven months.

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Jim Davison, EEF’s director in the East of England, said: “Manufacturing is still growing, just not at the pace anticipated at the beginning of the year. The sector is still in positive territory, but the ground is looking a lot less firm beneath its feet.

“Much of this weakening is down to the impact of the decline in oil and gas activity on the supply chain, plus the knock-on effect on domestic demand.”

He added: ”A resilient and productive economy needs a vibrant manufacturing sector, investing in technology, innovation and people.

“The sector has seen a good run of not only growth, but employment, investment and productivity gains over the past couple of years and it’s vital that the new Government takes all necessary steps to enable this to continue into the future.”

: : More than 30 senior figures from across the region attended the annual East Anglian Manufacturers Forum, staged in Ipswich by EEF, banking group Barclays and accountancy and advisory firm BDO LLP.

The forum is urging the new Government to show increased support for the manufacturing sector in the UK and specifically in East Anglia. Specific lobbying issues include innovation, productivity, infrastructure, skills and setting formal targets for growth.