Bullish output figures draw warning
1 min read
Manufacturing's continued renaissance received a shot across the bows today (13 January) as another set of bullish official output figures attracted a warning about the sector's over-conservative attitude to growth, leaving firms vulnerable to foreigh takeovers.
Figures from the Office for National Statistics showed total manufacturing output in November up 0.6% on the previous month and an annual increase of 5.6% compared to the same month a year ago.
Over the 12 months to November, output increased in 12 of the 13 sub-sectors and fell in one sub-sector. The largest contributors to the increase were the machinery and equipment industries which increased by 20%, the food, drink and tobacco products industries which increased by 8.7% and the basic metals and metal products industries which increased by 11.6%. The largest negative contribution to overall output was a decrease of 2.8 per cent from the chemicals and man made fibres industries.
The 0.6% increase between October and November came mainly from increases of 3.2% in the transport equipment industries, 1.9% in the machinery and equipment industries and 0.9% in the food, drink and tobacco products industries. Output from the electrical and optical equipment industries fell 1.2%.
Commenting on the new data, Barclays head of manufacturing Graeme Allinson said: "With something of a manufacturing renaissance gathering pace in the UK, the manufacturers we have been speaking with recently are feeling positive about the year ahead, with many relieved to come through another difficult year relatively unscathed.
"However, any economists expecting major expansion and acquisition plans from our manufacturing sector may be disappointed, as a conservative approach focused on organic growth remains prevalent amongst UK owned manufacturing firms, many of which could therefore become prime targets for offshore acquisitions in 2011.
"Most manufacturers see the key threat to their operations this year being rising commodity prices, which could eat into margins already squeezed by the recession. The ability to pass on price rises quickly will be crucial for those companies directly at the mercy of fluctuating input prices, something that has already provided an issue for some of our manufacturing clients over the past 18 months when selling goods through large retail chains."
