Cost fears dampen bumper first quarter figures from EEF

Top line figures showed international demand spurring output and new orders to over 20% for the last three months, the EEF/BDA data revealed. This was the fourth consecutive quarter where balances registered above 20% making it one of the strongest periods on record, the EEF added. Investment and recruitment intentions also hit record highs, data revealed. However, doubts remained over the location and scale of investment plans, the EEF warned. Survey data also revealed caution around the strength of UK economic recovery and the cost of finance for SMEs. Lee Hopley, EEF chief economist said: "Companies continue to be cautious about committing to large, game changing investments here in the UK, which will deliver the type of growth our economy needs." Caution extended into cost control, the survey also found. More manufacturers had reached their limit to absorb cost rises with a balance of 26% increasing prices since December, the survey showed. Nearly 40% said they expected to raise prices in the next three months. Tom Lawton, head of manufacturing at BDO LLP added: "The data points to price increases among manufacturers, driven in part by underlying movements in the cost of raw materials. We are seeing evidence of this among companies, where some have been able to increase prices by significant amounts as they seek to rebuild margins, considerably improving them for this year."