Market watchers see light at end of tunnel
16 Jun 2009
London - Watchers of UK and international markets continue to detect flickering but consistent signs that a recovery is beginning to take shape in the industrial sectors. The pickup trends are being reported even in the hardest hit sectors including chemcials and transport.
UK employers group the CBI has declared the economy here to be "stabilising", with the worst of the quarterly falls in GDP behind us. However, it added that it would take until the beginning of 2010 before we see growth returning at a modest rate before gradually picking up during the year.
Supported by low interest rates and quantitative easing, the CBI said UK GDP should flatten out during the second half of 2009I. It then predicted quarter-on-quarter figures of -0.1% and 0% in Q3 and Q4, and quarter-on-quarter growth of 0.1% and 0.3% in Q1 and Q2 of 2010.
"The harshest period of the recession looks to be behind us, the economy is stabilising and this should continue during the second half of this year," said Richard Lambert, CBI director-general. "The return to growth is likely to be a slow and gradual one; difficult credit conditions are still affecting business behaviour. For positive growth to return, lenders need to feel more confident so that credit can start flowing again."
The CBI also noted that the labour market was proving to be even more flexible it had hoped, with many more private sector employees accepting wage freezes and short-time working than in previous downturns. This, it said, should help limit the pace of job losses through 2009, and enable unemployment to peak at a slightly lower level than previously thought.
Business investment is expected to shrink by 12.4% this year, from the -9.3% expected in April, and by a further 1.4% in 2010, said the CBI. Companies that had reduced stock at a rapid pace at the start of this year will start re-building their stocks next year, it added.
According to the Office for National Statistics, UK manufacturing output rose by 0.2% for two months in a row, between March and April. The most significant increases, it said, were 3.2% in the transport equipment industries and 2.3% in the chemicals and man-made fibres industries.
Against this, the ONS recorded decreases in output of 2.2% in the basic metal and metal products industries, while mining and quarrying output fell by 4.0% and output of the electricity, gas and water supply industries decreased by 5.5%, compared with the previous three months.
On the global front, meanwhile, a report by
SRI Consulting found that speciality chemicals end-use markets such as agriculture, water treatment, nutrition, household and personal care were showing significant resilience to the current economic crisis.SRI noted that while some segments - construction, chemicals, electronic chemicals, plastics additives, textile chemicals and speciality polymers - had followed the downturn of their end-use industries, others, including cosmetic chemicals, food additives, and industrial and institutional cleaners, suffered much less from the downturn.
As a result of the current financial and economic downturn, SRI expects the global speciality chemicals market to shrink by approximately 4% to $451 billion in 2009. It forecast these economic conditions to continue until sometime in 2010 and then gradually improve.
Some countries and regions will suffer greater decline than others and some will rebound earlier and faster than others. The specialty chemicals market in 2010 is estimated to reach about the same size as in 2008 and then gradually climb during the next three years to reach $530 billion in 2013, said SRI.
Please send your views to PE editor: patrick.raleigh@centaur.co.uk
