Manufacturing sector upbeat despite rising costs: EEF |
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Tue, 06 Sep 2005 06:05
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LONDON: The Engineering Employers’ Federation (EEF) yesterday reported a rise in British manufacturers’ confidence despite declining outputs and job cuts in the three months to August. The sector had seen its weakest employment levels in two years but was upbeat about future orders and expects output to increase driven especially by demand from the export market.
The optimism is in marked contrast to the picture of gloom painted by official data at the start of the year, which had showed the British manufacturing sector declining to recession levels.
According to the EEF the manufacturing sector has been resilient during the slowdown despite being hit with rising costs that tightened margins. Most firms are struggling under the impact of soaring energy prices and trying to pass on the cost to their customers, whereas many firms outside the car-manufacturing sector had, in fact, seen a modest upturn.
The EEF’s chief economist Steve Radley said that the current confidence levels in this sector may not be anywhere near last year’s but many firms are “guardedly optimistic about the future”.
If the quarterly figures are compared, then one sees the reason for the optimism: in the previous quarter only 1 percent companies had predicted output growth while in the three months to August, this figure had risen to 8 percent (still bleak compared to 27 percent in same quarter last year). The EEF report also shows expectation balance for export orders rise from 3 to 10 driven by growing demand from Asia and the US.
Another industry survey last week had observed similar upturn in the industry during August after four consecutive months of contraction. According to official figures the manufacturing sector was expected to contract 0.6 percent during the quarter.
Meanwhile, employees are not that optimistic. The latest quarter was the worst in over two years for job cuts. Another survey by Lloyds TSB which polled 2000 workers, said that 20 percent of the workers believed their job was less secure compared to the same period last year. Unemployment figures released by the government last month, showed the number of out-of-work people increasing for the 13 consecutive month in July. Rising costs were blamed for the jobs balance’s declining from -17 to -10. Soaring energy prices and difficulties in energy supply had increased the pressure on UK manufacturers.
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