Manufacturing growth 'faded away'
7 Dec 2015
A survey published by manufacturers’ organisation EEF says UK manufacturing is facing a difficult end to year amid the “gathering gloom” from the global economy.
The findings revealed in its latest Manufacturing Outlook survey paint a bleak picture as growth is revised down to -0.1% for 2015, while being forecast at 0.8% for 2016.
The EEF survey follows the Markit Purchasing Managers’ Index published last week, which showed the UK manufacturing sector had lost momentum in November.
The prospect of manufacturing contributing to growth in the UK economy this year has all but faded away
EEF chief economist Lee Hopley
EEF chief economist Lee Hopley said: “The prospect of manufacturing contributing to growth in the UK economy this year has all but faded away with another disappointing set of indicators from our survey.
“The downbeat mood may not be universal across all industry sectors, but it certainly seems to be spreading as the challenges have mounted through this year – from the collapse in the oil price, slower world trade growth and weaker than expected construction activity.”
According to the EEF, concerns regarding global trade growth, coupled with a weakening demand for developed and emerging markets, have been more prominent this year, which has led to a decline in export orders.
Indeed, output and orders balances plummeted to -12% and -19%, respectively, in quarter four, EEF said.
Meanwhile, employment in the sector has also taken a hit as manufacturers’ plans to recruit new staff members averages -0.7% across the sector, with electrical manufacturing recording a balance of change of -32% over the last three months.
Employment has been affected in particular because of the build-up of spare capacity in sectors supplying oil & gas, as well as job losses in the steel industry that have impacted on prospects for the metals sector, EEF suggested.
“Let’s hope that 2016 turns out to be a more stable year globally and the manufacturing sector gets a chance to recover,” said Richard May, head of the manufacturing sector at DLA Piper, who published the study alongside EEF.
