Despite posting a twelfth consecutive quarter of growth, Britain s manufacturers are feeling the chill from a slowing economy, according to a major survey published today by EEF, the manufacturers organisation and Grant Thornton.
Even with output holding up over the last few months, the EEF/Grant Thornton survey shows that a stagnant UK economy and a sharply deteriorating eurozone are now impacting on all sectors of manufacturing. However, the survey also shows the continued dilemma facing the Bank of England as companies price expectations continue to rise.
EEF believes it therefore falls to the government to address the rising risks of further economic weakness. By bringing forward policies that buttress business from gathering economic headwinds, EEF believes government can minimise cuts to jobs and investment and pave the way for an eventual upturn.
Commenting, EEF Chief Economist, Steve Radley, said:
Manufacturing has shown considerable resilience in the face of a credit crunch, a global economic slowdown and a massive increase in its costs. But there are now clear signs that these pressures are starting to take their toll on companies
Given the Bank of England s hands remain tied in the short term, it is now essential the government tackles this turning point for the economy head on. It must avoid adding any further costs to business and put in place policies which will provide the building blocks for an upturn.
Key findings:
- Output holds up in last three months
- New orders at 3 year low
- Domestic orders plummet but exports remain firm
- Price expectations rise
- Profit margins deteriorate
- Employment and investment intentions go into reverse
- Sharp decline in expectations