Manufacturing sector maintains strong growth

Manufacturing investment at record level

Recruitment and investment plans among manufacturers are at record levels as the sector maintains strong growth, a study shows.

The Engineering Employers Federation (EEF) said a survey of more than 500 firms showed that exports were behind "strong" orders, but it added a note of caution about the durability of the economic recovery.

The cost of finance, especially for smaller firms, was preventing demand for goods being translated into a recovery in investment, said the report.

EEF chief economist Lee Hopley said manufacturers have “picked up this year where they left off in 2010, with output growing and little sign that the export-led recovery is about to dry up in the near term”.

“However, the outlook for the rest of 2011 still remains uncertain as a number of economic headwinds persist and new geopolitical tensions add another layer of uncertainty to economic forecasts.

“Companies continue to be cautious about committing to large, game-changing investments here in the UK, which will deliver the type of growth our economy needs. They will be looking for the Chancellor to convince the sector that this Government has a plan to make the UK one of the most competitive places to invest and grow,” Hopley said.

Tom Lawton, of BDO LLP, which helped with the research, said the “data points to price increases among manufacturers, driven in part by underlying movements in the cost of raw materials”.

“We are seeing evidence of this among companies, where some have been able to increase prices by significant amounts as they seek to rebuild margins, considerably improving them for this year,” Lawton said

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