Manufacturers are expecting 3.6% growth this year but exports are disappointing

Manufacturers expectations for output were up in the last quarter, but most of the growth will come from inside the UK.

by Rachel Savage
Last Updated: 10 Jun 2014

Purveyors of ‘Made in Britain’ are feeling rather pleased with themselves at the moment, with manufacturers expecting output to grow 3.6% this year, according to industry body EEF and accountants BDO’s quarterly manufacturing outlook.

That is ahead of the 3% they expect the economy to grow by in real terms this year and the 2.7% growth they pencilled in for themselves last quarter.

Meanwhile, a net balance of 34% of the 275 firms surveyed expect their output growth to increase in the next three months, up from 29% last quarter to the highest level since the third quarter of 2007. That fits neatly with recent official stats showing output at its highest in 2.5 years.

Good news for the fabled economic rebalancing (i.e. not dominated by credit-fuelled house price rises and consumer spending) comes in the form of investment, with a net balance of 28% of companies planning to increase capital expenditure in the next year. That is down from 34% last quarter, although that was a record high.

Not such good news, however, is exports, Orders from abroad fell short of record expectations last quarter, with a balance of 9% of manufacturers reporting a rise in overseas sales, down from 16% in the first three months of the year.

They may not improve any time soon either as the Eurozone teeters on the brink of deflation – unless European Central Bank president Mario Draghi’s interest rate medicine works its magic…

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