THE impact of the recession on the region's manufacturing firms appears to have bottomed out with businesses hoping the green shoots of recovery will soon be on their way, it has been claimed.

THE impact of the recession on the region's manufacturing firms appears to have bottomed out with businesses hoping the green shoots of recovery will soon be on their way, it has been claimed.

Almost a quarter of businesses have reported an increase in total new order volumes with cash flows showing a slight improvement, according to a new survey.

The verdict from the EEF, the manufacturers' organisation, in their latest survey, is that the health of the east of England's manufacturing firms is beginning to show signs of improvement, but a full recovery remains some way off.

A further decline in overall output has been recorded, however, 23% of businesses report an increase in total new order volume and there appears to be a slight improvement in cash flow and a greater willingness to invest in capital expenditure. Manufacturers in the east also expect a slight improvement in trading conditions in the next three months.

Keith Hamilton, external affairs advisor for EEF in the east of England, said: “Overall, the effects of the recession appear to be levelling out.

“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.”

Forecasts suggest there will be a return to growth in 2010, with the latest check showing pressure on prices and margins is continuing.

The survey says although jobs continue to be lost, around six in 10 respondents reported no change or some gains in numbers employed.

Mr Hamilton 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, the Government and the Bank of England need to ensure they can access the support they need from banks and credit insurers.”

EEF expects manufacturing output to fall by 11% in 2009, while engineering output is forecast to decline by 17.5% this year and by 0.8% next year.