Signs of recovery in manufacturing

Manufacturing
has shown the first signs of a turnaround, according to a new survey.

The
EEF/RSM Robson Rhodes third quarter 2003 Engineering Outlook survey by the
Engineering Employers’ Federation (EEF) shows the second consecutive
improvement reported by members.

For
the first time in more than two years, the number of companies reporting output
and orders growth has risen. But it was demand for exports that propped up
order books this quarter, as companies continued to report a decline in the
domestic market.

Levels
of optimism about the future have also improved although they are only a little
above where they were in the middle of 2002.

While
fewer companies than at any time over the past two years are now reporting
plans to scale-back investment over the next 12 months, less than a fifth are
actually planning to increase investment. Three in 10 are continuing to scale
down their plans, and these cutbacks have seen manufacturing investment shrink
by 40 per cent over the last five years.

EEF
chief economist Steve Radley said: "A more favourable currency and some
signs of global markets improving are helping manufacturers to reap the rewards
of their efforts to improve competitiveness. However, the upturn is in a very
early phase and many firms are still struggling. We are still some way off the
stage when companies have the confidence to start investing again and when we
can call it a full recovery."

By Quentin Reade

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