Manufacturers in London and the South East are continuing to enjoy very buoyant conditions across most economic indicators according to a new survey by EEF and BDO LLP.
The EEF/BDO Manufacturing Outlook survey for the third quarter shows that output in the region was the strongest of any UK region with a balance of +52%, exceptionally strong by historical standards, and a total order balance of +38%, the second highest UK region.
In particular, export orders (+47%) are going from strength to strength and are the highest of any UK region. This reflects the national picture of a sector benefitting from both a pick-up in the Eurozone, cited as the market most conducive to sales growth, as well as growing markets around the world. This picture is expected to pick up in the coming months.
This strong performance has boosted business confidence amongst firms in London and the South East to the highest of any UK region. This is reflected in the demand for skills with recruitment intentions amongst firms more than doubling.
Despite the buoyant picture, the cloud on the horizon remains the UK economy. While firms are confident of their own performance, EEF’s indicator for the UK economy has slipped for the second quarter running in response to the continued political uncertainty and squeeze on consumer spending. As a result EEF continues to expect tepid growth of 1.7% this year and 1.3% in 2018.
Martin Strutt, regional director for EEF in London and the South East of England, said: “Manufacturers appear to have taken the recent political upheaval in their stride and are taking advantage of growing world markets to make hay while the sun shines. This period is likely to be the peak, however, and we are likely to see a more stable picture in the coming months rather than any further significant acceleration.
“There is little doubt that Brexit is likely to weigh on sentiment over the next twelve months with uncertainty over the UK’s terms of exit. As such, it is vital the Government sends a signal to industry and investors in the UK and overseas that it is doing everything in its power to get growth of the UK economy back on the agenda. This must include a bold and ambitious cross -government industrial strategy.”
Marc Reinecke, partner and head of manufacturing at BDO in London, added: “Despite the economic and political uncertainties, manufacturers’ continue to be a force to be reckoned with, delivering a strong performance as well as increasing employment plans to make the most of the strengthening export opportunities available to them.
“However, manufacturers’ confidence about the UK economy has continued to fall for the second quarter running. With growing opportunities around the world, particularly the Eurozone, manufacturers’ need stability and certainty in government policy (including Brexit) to provide the right environment for them to commit to the significant capital and research investment required to support continued growth.”