Growth in manufacturing at 15-year high

Manufacturers enjoyed buoyant trading conditions in the second quarter, with output and order activity increasing by the highest rates since 1995.

Manufacturers enjoyed buoyant trading conditions in the second quarter, with output and order activity increasing by the highest rates since 1995, according to industry body the Engineering Employers Federation (EEF).

A balance of 34 per cent of manufacturing firms reported an increase in orders, while 30 per cent saw a rise in output, up from 2 per cent and 8 per cent respectively in the previous quarter.

Lee Hopley, chief economist at the EEF, says: ‘[They] are pulling in more export orders on the back of a recovering world economy and a better outlook for the domestic market is giving companies some confidence to recruit again.’

Responses on employment also turned positive in the second quarter, with a balance of 15 per cent of companies expecting to recruit in the next three months.

But the apetite for investment among manufacturers remained weak, with 65 per cent of companies citing uncertainty over domestic demand as a reason not to put money back into their businesses and a further 46 per cent citing uncertainty over future tax changes.

The body forecasts growth of 3.5 per cent in manufacturing both this year and in 2011. Meanwhile engineering output, which fell by 15 per cent in 2009, is expected to grow by 6.4 per cent in 2010.