UK manufacturing continues to grow despite uncertain outlook

The EEF/BDO Manufacturing Outlook survey shows output and orders still growing, with all sectors reporting positive activity in the last three months. Exports are claimed to remain the main driver behind growth with the gap between overseas and markets still evident.

However, as the economic outlook has become more uncertain, a divergence in views of recent trading conditions and future expectations has opened up.

According to EEF, a small number of sectors, including metals and electronics, have seen weaker orders intake over the past three months, with corresponding concerns about output expansion evident in the next three months.

In addition, the balance between caution and optimism appears to have shifted for small companies looking at conditions over the next quarter, where less visibility around future orders is keeping confidence in check.

Commenting, EEF chief economist Lee Hopley, said: ‘Manufacturers have bucked other recent negative indicators, holding out hope that the recovery has not yet run out of steam.

‘Across much of the sector, companies are still busy and orders are holding up, particularly from overseas markets. However, conditions have moved on from the broad-based recovery seen over the past 18 months to a more mixed picture, especially around the short-term outlook.

‘The growing challenges in the global economic environment, in particular, are casting a shadow over expectations and seem to be giving some companies pause for thought when it comes to investing and recruiting. But there is cautious optimism that growth will continue through the rest of the year.’