2nd September 2008
Government should address 'rising risks' to manufacturing sector
The Government should tackle the rising risks of economic slowdown in the manufacturing sector, the EEF have said.
The call comes after a survey by the EEF, the manufacturer's organisation, and chartered accountants Grant Thornton found that UK manufacturers are continuing to suffer in the current economic climate.
While the sector continued to grow for a twelfth consecutive quarter, supported by existing orders, the last three months saw new orders in manufacturing fall to a three-year low.
And although a balance of +18% of firms judged exports to be higher than the previous quarter, in which a balance of +10% was reported, domestic orders were down to -13%. The EEF suggested that the perceived rise in exports has been fuelled by the weaker pound.
Five of the seven manufacturing sectors surveyed said that activity in the last three months was weaker than in the previous quarter. Basic metals and electrical equipment were the hardest hit sectors, with electronics and transport the only sectors to show improvement, with balances of +46% and +43% respectively.
All regions reported weaker employment balances, with only manufacturers in London, the South East and Eastern regions planning to increase staffing levels.
Separately, the Markit Eurozone Purchasing Managers Index for the manufacturing sector also showed that the industry shrunk for the fourth consecutive month in August. Although the index recovered to 47.6 in August, from July's 47.4, it remained below the 50.0 mark, which divides growth from contraction.
The EEF's chief economist Steve Radley said the Government should avoid adding further costs to businesses and instead provide the building blocks for an upturn in economic conditions.
The Government will next week publish a strategy policy for the manufacturing sector. The document is expected to investigate ways Government procurement could help struggling manufacturing companies but is thought unlikely to encourage spending to boost the sector.
It is also expected to focus on ways the Government can help the manufacturing sector take advantage of opportunities presented by the creation of a low-carbon economy.
The call comes after a survey by the EEF, the manufacturer's organisation, and chartered accountants Grant Thornton found that UK manufacturers are continuing to suffer in the current economic climate.
While the sector continued to grow for a twelfth consecutive quarter, supported by existing orders, the last three months saw new orders in manufacturing fall to a three-year low.
And although a balance of +18% of firms judged exports to be higher than the previous quarter, in which a balance of +10% was reported, domestic orders were down to -13%. The EEF suggested that the perceived rise in exports has been fuelled by the weaker pound.
Five of the seven manufacturing sectors surveyed said that activity in the last three months was weaker than in the previous quarter. Basic metals and electrical equipment were the hardest hit sectors, with electronics and transport the only sectors to show improvement, with balances of +46% and +43% respectively.
All regions reported weaker employment balances, with only manufacturers in London, the South East and Eastern regions planning to increase staffing levels.
Separately, the Markit Eurozone Purchasing Managers Index for the manufacturing sector also showed that the industry shrunk for the fourth consecutive month in August. Although the index recovered to 47.6 in August, from July's 47.4, it remained below the 50.0 mark, which divides growth from contraction.
The EEF's chief economist Steve Radley said the Government should avoid adding further costs to businesses and instead provide the building blocks for an upturn in economic conditions.
The Government will next week publish a strategy policy for the manufacturing sector. The document is expected to investigate ways Government procurement could help struggling manufacturing companies but is thought unlikely to encourage spending to boost the sector.
It is also expected to focus on ways the Government can help the manufacturing sector take advantage of opportunities presented by the creation of a low-carbon economy.
Tags: Office
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