Belfast Telegraph

More bad news as industry orders fall

By David Prosser

Britain's manufacturing sector is poised to give up the strong gains it has made since the end of the last recession, the industry will warn today, undermining the Government's claims that it is beginning to rebalance the economy.

The EEF, the manufacturers' organisation, will warn that growth in the sector fell sharply over the past three months, that the majority of companies expect their order books to shrink next year and that predictions for the performance of industry in 2012 have had to be slashed back.

EEF chief economist Lee Hopley said: "The signs of caution that had been emerging through the second half of this year have clearly become more entrenched as global growth concerns have escalated. There are not only question marks over wider manufacturing prospects at the beginning of 2012, but also the exports and investment needed to underpin sustainable growth."

The warnings are disappointing because manufacturing has performed so well since the end of the recession in the final months of 2009, and the Government has repeatedly stressed its determination to see industry become responsible for producing a greater share of Britain's economic growth.

The EEF said that after six consecutive quarters of surveys of the sector showing near-record levels of new orders and output, there had been a marked deterioration over the past three months.

Some 12% more companies reported a rise in output over the three months to the end of November than a fall, while only 8% more said they had seen increased levels of orders. The figures for the previous three months were 27% and 23% respectively.

In some parts of the manufacturing sector, including the metals, rubber and plastics industries, the figures have now turned negative, though other areas, particularly motor vehicle production, are showing more resilience.

For now, manufacturers are reporting still reasonable levels of investment and recruitment, the EEF said, though it warned many companies have reined back expansion plans markedly since the last quarter.

The EEF's analysis is broadly in line with Office of National Statistics data, which suggests the manufacturing sector has been broadly flat since autumn.

There is also mounting concern about the outlook for next year, particularly with the sovereign debt crisis in the eurozone now beginning to hit export orders.