Cocktail of problems continues to impact on manufacturers
The outlook for North East manufacturers is deteriorating on the back of a cocktail of factors related to Brexit uncertainty, weaker global growth and the impact of protectionist policies, according to a major survey published today by EEF, the manufacturers’ organisation and business advisory firm BDO LLP.
The Manufacturing Outlook survey found output sharply contracted to a balance of -18%, the worst figure since 2016, whilst domestic orders also fell sharply to a balance of -30%, the first negative indicator in a year.
Export orders, which have been a big driver for manufacturing in recent years, were also flat for the third quarter in a row, reflecting weaker global markets, the fading effects of sterling devaluation and increased protectionist policies.
The picture is reflected in weaker recruitment, while investment intentions fell in line with the national picture to -36%, the first negative investment in three years.
While EEF has revised its growth forecast for manufacturing for 2018 upward, it has downgraded its forecast for 2019 to just 0.3% from 0.5%. GDP forecasts remain unchanged for 2018 and 2019.
Richard Halstead, director of member engagement for EEF in the North, said getting Brexit right was critical.
“The moderation in manufacturing performance over the course of this year appears to have gathered pace during the final quarter with more clouds on the horizon than there have been for some time,” he said.
“This should come as no surprise given the significant political uncertainty at home which is why it is essential there is an agreement for the UK’s withdrawal as soon as possible.
“If everything that can go right does, then business and consumer confidence should hopefully gather some steam next year with improved prospects for growth.
“That’s the backdrop we’re working to, let’s hope it’s the right one.”