Manufacturing sector should remain optimistic
So it appears things weren’t that bad after all.
After a wave of headlines at the beginning of April told us that the UK manufacturing recovery had hit the buffers, the Office for National Statistics (ONS) said last week that output actually rose 0.8 per cent in February, rebounding from a snow-related January slump.
The increase was almost double economists’ forecasts and comes after a 1.9 per cent drop in the previous month. According to the ONS, overall industrial output in Britain rose 1 per cent, which was also above forecasts.
Avoiding the triple dip
Though concerns will remain about whether we’re heading for a triple dip recession, and while we shouldn’t put too much emphasis on every piece of data that is released, businesses that are well-managed and have a clear strategy in place should feel encouraged.
I’m certainly hearing plenty of anecdotal evidence to suggest that the manufacturing recovery continues at a pace. This view was backed up by the recent SME manufacturing survey that we conducted with our colleagues at MHA, a UK wide group of independent accountants and business advisors.
Our survey questioned 295 SMEs from a variety of sub-sectors within manufacturing and engineering. 75 per cent of those questioned are predicting growth in 2013 and more than 30 per cent anticipating growth in excess of 10 per cent. Intent to invest in research and development, certainly a good indicator of confidence, has also increased by as much as 10 per cent versus 2012.
An improving funding landscape?
While there are undoubtedly still many challenges ahead, this has to be looked on optimistically. Anticipating and planning for growth is vital if the sector is to play a role in reinvigorating and re-balancing the UK economy.
It would also appear there are more positive signs when it comes to funding. Two thirds of respondents to the MHA survey feel that they receive adequate funding from their banks and 86 per cent indicate that they have not had a funding request rejected.
Reasons to be cheerful
On the flip side, the burden of red tape and the lack of national strategy for the sector continue to trouble the vast majority of manufacturers and engineers, with only two per cent of respondents in our survey believing Vince Cable’s recent recommendations for the sector would make any real difference.
However, as I spoke about in a recent blog, it could be argued that a further planned cut in the main rate of corporation tax and the launch of the employer NIC scheme are a huge plus for some manufacturers.
There’s going to be many ups and downs for the economy during the rest of this year, but, whisper it, there are reasons to be cheerful.