Manufacturing firms bouncing back

Friday 09 January 2015

Manufacturers have shrugged off recent signs of a slowdown in UK growth to report healthier domestic and export orders at the end of 2014.

The British Chambers of Commerce (BCC) said its quarterly economic survey showed businesses were well placed to grow this year, although it warned this may not last if "political point scoring" dominated the election campaign.

BCC director general John Longworth said it was "pleasing" to see the manufacturing sector bounce back from signs of slowdown in recent months.

The balance of industrial firms reporting an increase in domestic sales rose to plus 36% from 23% in the previous quarter, with the domestic orders balance up to 38% and export sales up by ten percentage points to plus 26%.

In the services sector, domestic and export sales balances rose in the quarter after stagnating over the previous three months. The survey also found that an all-time high number of businesses set out to recruit staff in the period, with the balance of manufacturing firms operating at full capacity up by one point to plus 41% and the figure for service firms in line with the third quarter at plus 46%.

The BCC said the latest results supported its view that annual UK growth would stabilise above 2%.

But Mr Longworth warned: "The UK's economic recovery still faces several obstacles, intensified by the uncertainty of the upcoming general election. Businesses are bouncing back, but their optimism may not last if political point scoring outweighs sound economic policies. It is imperative that all political parties use the forthcoming election campaign to outline their plans to support long-term business growth and investment."

Today's findings contrast with recent CIPS/Markit surveys, where a combined output reading from the construction, manufacturing and services sectors fell from 57.7 in November to 55.4, its lowest since May 2013.

This pointed to GDP growth of 0.5% in the fourth quarter, down from 0.7% in the previous period.