Economy: Recruitment market by sector: Manufacturing

At last, some evidence is beginning to emerge that the recession in UK
manufacturing industry is coming to an end, and that a recovery may be in
sight. Although the latest data shows output was down in April by 4.5% when
compared with a year earlier, output was actually up, albeit only 0.8%.

The engineering industry typifies the current state of manufacturing in the
UK. Some signs of optimism are evident in forward-looking indicators such as
business confidence and growing order books. But this mood must be tempered by
the reality of falling revenues, static profits and a succession of
announcements of job losses.

The turnover of firms in the engineering industry in the three months to
April 2002 decreased by 1.0 % when compared with the previous three months.
This was due to decreases of 0.4% in demand from the domestic market and 1.8%
in export demand. Compared to the same period a year ago, total demand fell by
19.5%.

On a more positive note, total orders on hand at the end of the three months
to April 2002 increased 2.1 per cent, compared to the level reported at the end
of the previous three months, but decreased by 8.5% compared to the
corresponding period of last year.

This trend of declining output, but more optimistic outlook in terms of
orders is evident across most sectors of the engineering industry.

Output in machinery and equipment engineering fell by 1.5% in the three
months to April 2002, compared to the previous three months – 6.6% down on the
same period in 2001.

In contrast, total orders at the end of the three months to April 2002 were
5.1% higher than the previous three months – only 0.2% lower than in 2001.

Similarly, total turnover of the electrical and optical equipment
engineering industries in the three months to April 2002 decreased by 0.8 per
cent compared to the previous three months. This was due to a decrease of 2.1
per cent in export turnover which was offset by a 0.2 per cent increase in home
turnover. Compared to the same period a year ago, total turnover decreased by
24.2 per cent.

Total orders on hand at the end of the three months to April 2002 were 0.3
per cent higher than the level at the end of the previous three months and were
12.9 per cent down on the level at the end of the same period a year ago.
Compared to the levels at the end of the three months to April 2001 home orders
on hand rose by 4.7 per cent, whilst export orders on hand fell by 37.8 per
cent.

Total manufacturing output in the latest three months fell by 0.3 per cent
compared with the previous three months. In the latest three months, there were
significant decreases in output of 2.9 per cent in the electrical and optical
equipment industries and 2.2 per cent in the transport equipment industries.
There was a significant increase in output of 1.4 per cent in the chemicals and
man-made fibres industries.

Employment in manufacturing continues to decline with the rate accelerating
from around 150,000 jobs lost at the end of last year to 175,000 at the
beginning of 2002. Perhaps surprisingly, earnings in the sector continue to
rise at around 3-3.5% per annum.

This article first appeared in Recruitment Trends & Forecasts.
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