Companies across the UK manufacturing supply chain are putting in place the plans necessary to enable them to meet an increase in orders in 2014, a study by accountants BDO for the manufacturers organisation, EEF suggests.
The EEF is forecasting that the sector will grow by 2.7 per cent in 2014 compared to 2.4 per cent for the economy overall.
The improved performance during 2013 has also resulted in EEF revising its forecasts for this year, showing manufacturing contracting by just 0.1 per cent and the economy growing overall by 1.4 per cent
EEF chief economist Lee Hopley said: “Over the course of the year we have seen a definite turnaround in prospects for manufacturing and this looks set to continue into next year. This increased confidence is evident in companies looking to increase their headcount and, most importantly for balanced growth, step up their investment.
“However, uncertainties in the global economy remain and a sustained recovery is not secure. As a result, growth must remain a priority for government over the remainder of this parliament, starting with the Autumn Statement this week.”
The survey showed that output and order balances fell back from the three and two year highs reached last quarter. Responses, however, remain strongly positive with balances of companies indicating output and orders increased in the past three months coming in at 19 per cent and 18 per cent respectively.
The strongest positive balances were reported by companies in the motor vehicles and electronics sectors.
Investment intentions for the year ahead strengthened further from 24 per cent to 27 per cent and remain at a six year high.
Tom Lawton, head of manufacturing at BDO, said: “Continued strong demand within the UK domestic market is very encouraging and this does suggest that a sustainable manufacturing recovery has gained a foothold in this country. However, international markets hold the key to a fully-fledged and meaningful improvement for in UK manufacturing and these markets remain frustratingly fragile.
“We haven’t missed the boat yet, but companies need to stand ready and be supported by an accessible, Government backed export framework to take full advantage of the recovery on the continent and beyond once it starts.”