Chancellor urged to maintain focus on long-term growth

They revealed that a buoyant domestic market had helped secure the strongest annual growth rate across the sector this year since 2010. "With strong positive expectations through much of 2014 – particularly on exports – being continually frustrated, manufacturers have moderated their outlook for growth going into next year. Global uncertainty, especially the weak performance of the eurozone, is also contributing to a more cautious outlook in the short term," said the EEF. In response, EEF is urging the Chancellor to maintain a long-term focus in this week's Autumn Statement, and back business investment with positive measures on infrastructure and innovation. EEF chief economist, Lee Hopley (pictured), said: "2014 has proved to be a solid year for manufacturers with growth on track to exceed that for the economy overall. There have been some notable areas of strength this year, especially among sectors which rely on demand in the home market. Overall we should see a good balance of sectors and sizes delivering positive news on output, jobs and investment this year." She added: "Despite some uncertainty ahead, the fact companies are maintaining their investment and hiring plans shows they have some optimism about prospects ahead. The Chancellor can do his bit to back these plans by ensuring the business environment for companies planning to invest, recruit and get into new markets is a target for further action on Wednesday." Head of manufacturing at BDO, Tom Lawton, said: "The relative strength of the UK's economy is allowing continued Manufacturing growth against the headwinds of poor export markets. The sub sectors that are doing particularly well are those that feed into the strongest areas of our domestic market, for example those that supply the automotive, aerospace and construction industries." According to the survey output and order balances remained positive, with output picking up to +17% (+10% in Q3). New orders remained the same as in Q3 at +10%. Manufacturers said they were more cautious than the buoyant expectations of previous surveys although they remained positive. Forward-looking output balances for the next three months have pared back to +10% (+22%), while there is a similar easing in the orders outlook with a balance of +6% (+20%). The domestic market continued to be a source of strength, picking up from +3% in the last quarter to +10% and well below firms' expectations. However, in the face of increased political instability, subdued global growth and poor performance in the Eurozone, export orders remained in negative territory at –3% (-4%). A balance of +16% (+17%) of manufacturers said they planned to increase capital expenditure in the next three months, the 18th consecutive quarter of positive intentions, while a balance of +21% (+18%) of manufacturers have increased hiring in the past quarter. According to EEF, despite the increased political and economic uncertainty looking forward, the fact companies have reasonably strong investment and recruitment intentions shows they remain positive about their prospects for next year.