Member Article

North East manufacturers end year with festive cheer, finds EEF survey

Manufacturers in the North East are ending the year with plenty to cheer due to positive conditions across most economic indicators, according to new survey from manufacturers’ organisation EEF and accountancy and business advisory firm BDO LLP.

The Manufacturing Outlook survey for the fourth quarter shows output across the region increased significantly with a balance of +35% of companies saying their output increased.

This was matched by overall orders which also picked up significantly to +29%, reflecting the national picture of a sector benefitting from increasing demand from Europe and other growing markets around the world. This picture is expected to gain momentum in the coming months.

This strong performance and the need for extra capacity has boosted recruitment amongst firms in the North East, with recruitment intentions remaining strong by historical standards at +29%. This is driving firms’ investment intentions which have also picked up significantly to +20% (+7% in Q3).

The mood of optimism amongst North East manufacturers has boosted business confidence to its highest ever level and is the second highest of any UK region.

As a result of the strong conditions for manufacturing through 2017 and the positive outlook for 2018 EEF has upgraded its forecasts for the sector to +2.1% and 1.4% respectively. This is faster than the UK economy overall where, in line with the OBR forecasts at the Budget, EEF expected tepid UK growth of 1.5% in 2017 and 1.3% in 2018.

Commenting, Richard Halstead, Director of Member Engagement for EEF in the North, said: “Stronger global growth has cemented the foundations for growth in manufacturing this year, but the sector’s contribution to the UK economy has been greater than most expected.

“Not only have we seen consistently positive survey responses in each quarter this year, but growth has been evident across all industry segments and UK regions in 2017.

“There is some confidence that this momentum will carry into 2018, but as we head towards the Brexit end game we need manufacturing to produce the same trick of broad based growth again next year.

“As we see more companies investing and capitalising on global growth, we’ve become more upbeat in our forecasts for the growth outlook. Government’s industrial strategy is now out of the starting blocks but it needs to maintain a steady pace on delivery of its policy commitments to anchor manufacturers’ growth and investment in the year ahead.”

Craig Burton, Partner and Head of Manufacturing at BDO in the North East, said: “Manufacturers in the North East have continued their strong performance into the final quarter of 2017, ending the year with plenty of festive cheer.

“The sector’s performance is being driven by increasing demand from around the world, in particular Europe. The task of government is very clear: it needs to deliver a Brexit that minimises disruption to manufacturers – they are the economic engine of the UK economy.

“It is encouraging for manufacturers to now see further detail of the Government’s long-awaited Industrial Strategy. However, it is critical that the Government commits to the strategy over the long term (15 to 20 years), avoiding the disruptions of political cycles and encouraging manufacturers to commit to significant capital investments to boost growth and productivity.”