Confidence in sector suffers sharpest drop in two years

MANUFACTURING firms reported the biggest decline in optimism this month since March 2013.

That’s according to the latest Business Trends Report by accountants and business advisers BDO in the North West.

Exporters have been particularly hard-hit as the continued slow performance of the Eurozone hits overseas markets and the strong pound makes British goods more expensive.

Added to this, the report shows low oil and gas prices have curbed investment by the sector and slowed orders for manufacturing firms in the region.

The four point drop in BDO’s Manufacturing Optimism Index means it currently stands at 103.4.

While it is still above the long term average, this is only due to the sector’s weak performance since the financial crisis.

It has prompted experts behind the research to call on the government’s Northern Powerhouse plans to translate into real support for the manufacturing sector

The drop in manufacturing confidence also comes in in stark contrast to BDO’s Optimism and Output Indices, which predict overall business growth for the latter part of 2015.

These held firm this month with each holding a reading of 104.5, pointing to strong confidence among most firms.

The manufacturing sector is still smaller than it was in 2008 so prospects for manufacturers need to be boosted to rebalance growth across the economy as a whole.

Tim Entwistle, partner and head of BDO in the North West, said: “Manufacturing is a key sector for economic growth, so specific support could help boost the economy as a whole.”