Manufacturers 'cautious' over recovery

Date: 8th September 2009

Smaller manufacturers will not experience across-the-board strengthening of their businesses as the economy recovers, The Manufacturing Institute warned today.

Adam Buckley, head of programmes for the organisation, said that firms needed to be "cautious" and that recent signals that the downturn had abated in the sector were "purely based upon restocking policies".

The comments also follow the release of a new survey from the Engineering Employers Federation (EEF) and BDO Stoy Hayward, which showed that many manufacturers were not expecting a quick recovery from the recession.

Data from the report showed that 26 per cent more firms were reporting declines in domestic orders.

Mr Buckley commented: "Order books and margins are still the main concern which is driving the need to reduce production costs, which in turn drives the need to reduce raw material and labour costs.

"Recent rises in energy costs are also placing further pressure on recovery. Import costs are still high due to the weak pound but this offers greater export opportunities as the global markets start to recover."

Last week, the Organisation for Economic Co-Operation and Development stated, in its Interim Economic Assessment, that global trade was set to grow over the months to come in tandem with a recovery in the general economy.

The British Chambers of Commerce expects UK GDP to grow by 1.1 per cent next year, after suffering a decline of over four per cent for 2009.