Member Article

Survey indicators bring hope for Yorkshire manufacturing prospects

Prospects for Yorkshire manufacturers have improved over the past three months but challenges remain as companies fail to meet their forecasts for 2013q2, according to the second quarter Manufacturing Outlook survey published by EEF, the manufacturers’ organisation, and accountants and business advisers BDO LLP in Yorkshire.

According to the survey, both output and orders returned to positive territory in the last quarter reporting a balance of +18% and +13% respectively. But manufacturers in the region were expecting an even better performance, with forecasts for 2013q2 set at a balance of +42% for output and 33% for orders.

Looking forward, Yorkshire and Humber manufacturers appear confident that output and orders will continue to rise, with a balance of +33% and +16% respectively.

In addition, showing further positive signs is the region’s investment intentions. In the past quarter, the balance of companies looking to invest has increased, with the percentage balance of those in the Yorkshire planning to boost capital expenditure increasing to +18% from +9% in 2013q1. This bucks the national trend which has seen an overall decrease in investment intentions this quarter.

Conversely, the balance of companies increasing headcount over the past three months has fallen from +8% in 2013q1 to +4%. This is below the average reported nationally of +11% in 2013q2.

UK-wide, the domestic market has improved as companies report the first positive balance on UK sales since 2012q2. However, responses were somewhat weaker on export sales, and manufacturers are a bit less optimistic about a strong rebound in overseas sales compared with three months ago.

EEF Yorkshire region director, Andy Tuscher, said: “While the demand environment in major European markets remains weak and some individual industrial sectors are facing their own specific challenges, the widespread improvement in our survey indicators is welcome news.

“However, a couple of aspects – namely the relative weakness in export orders – suggest that confidence may still be tempered for now.”

Also commenting, Jason Whitworth, partner at BDO LLP in Yorkshire, said: “Yorkshire firms have witnessed good growth in orders and output, alongside improved investment intentions in the last quarter, and they have a lot to be positive about.

“But the survey results also show that companies are less optimistic about export orders. It is not yet clear whether this is due to the difficulties in Europe or difficulties in establishing a sustainable presence is the fast growing emerging markets.

“I am a strong believer that, although entering into new international markets can be difficult, businesses shouldn’t give up. If they take all the right steps and are committed to expanding their non-domestic sales, businesses will reap the rewards in the long-term.

“It is at this important point where it is crucial for Government and lenders to get behind the numerous positive indicators emerging from the sector and do all they can to help build the momentum of a recovery or risk seeing things stutter once more.”

This was posted in Bdaily's Members' News section by Mark Lane .