Manufacturing optimism grows as revival gathers pace

Apr 16 2004 by Brian Amble Print This Article

New figures suggesting that UK manufacturers' order books have hit a seven-year high have provided further evidence of real recovery in the hard-hit manufacturing sector.

A British Chambers of Commerce (BCC) survey found that that manufacturing exports in the first quarter of 2004 rose to their highest level since early 1997 while domestic orders were the strongest since 1999.

Manufacturing confidence Ė calculated bu subtracting the percentage of companies reporting decreases from the percentage reporting increases - rose from 48 in the final quarter of last year to 50.

The BBC survey of more than 6,000 companies is the latest to suggest a real recovery in manufacturing and echoes research from other organisations such as the Confederating of British Industry, the Engineering Employers Federation and the Chartered Institute of Purchasing and Supply.

The figures are in stark contrast to recent grim official figures released by the Office for National Statistics earlier this month. These showed a fall in manufacturing output of 0.6 per cent in February, prompting many to question the accuracy of the official data.

Meanwhile, the latest 'Report on Jobs' released this week by the Office of National Statistics point to a reduction of 102,000 in manufacturing jobs over the past quarter to a level of 3.4 million - the lowest since records began in 1978.

Nevertheless, the BCC's economic adviser, David Kern, remained cautiously optimistic.

"Manufacturing is not yet booming," he said. "It stagnated in 2003 but we hope to see a gradual improvement in 2004. For the first time in years, manufacturers intend to recruit rather than lay off workers and prices are at their highest since the question was first asked in 1997."

Slightly more manufacturers said they were confident their sales would increase over the next 12 months. However, investment by manufacturers in plant and machinery decreased significantly.

The BCC said that it expected the recovery to continue to gather momentum in coming months despite considerable risks remaining for the sector as a whole.