North West manufacturers ease from lofty heights of last year

EEF, the manufacturers’ organisation

North West manufacturers have seen an easing in conditions in the last quarter, continuing the downward drift from the very strong picture of growth seen across the board during 2017 according to a major survey published today by EEF, the manufacturers’ organisation and accountancy and business advisory firm BDO LLP.

The survey shows a combination of an easing of growth and increased political uncertainty in some global markets, the downward drift in output balances in some sectors from the lofty heights of last year and, a weaker outlook in the construction sector supply chain mean, the outlook is slightly more subdued than it has been for some time.

According to the survey both output and orders eased back from the previous quarter to +29% and +43% respectively, but both figures remain high by historical standards. The slight easing is reflected in the intention to recruit which has fallen back to +14%, but given the last quarter was at a very strong historic high this is not unexpected.

In contrast, however, the confidence of North West firms to invest is the strongest of any UK region at +29%.

Looking forward, EEF has made a small downgrade to its economic forecasts. It is now forecasting GDP growth of 1.2% in 2018 and 1.3% in 2019 (1.5% and 1.3% respectively from Q1) and manufacturing to grow by 1.9% and 0.5% (down from 2% and 0.6% respectively).

Commenting, EEF Director of Member Engagement for the North, Richard Halstead, said: “This is a strong performance by North West companies which reflects the positive sentiment in the Region. Whilst there may be some easing to come from continued political uncertainty in line with the national picture, the long-term prospects for companies that invest in skills and training in particular will remain bright.

Graham Ellis, Director and Head of Manufacturing at BDO in the North West said: “Following a strong 2017, we are starting to see the impact of the ongoing political and economic uncertainty on manufacturers in the North West. However, despite the sector’s slowing performance this quarter, manufacturers in the region still remain cautiously optimistic about the future.

“It is now more important than ever for Government to not lose sight of the needs of manufacturing, or indeed the wider economy, during the ongoing EU negotiations. We remain confident that manufacturers in the North West will continue to thrive, but the right support and a strong trading environment will be key to sustaining this. Having more transparency from the Government will give the industry confidence to invest in skills, automation and digitisation, which will be vital to the future of UK manufacturing.”