EEF: Manufacturing growth slows as orders and output decline

The latest survey from EEF and BDO showed manufacturing activity having fallen back in the last quarter in response to growing economic uncertainty in major markets. This has fed through to an easing in investment and recruitment intentions. In line with the deterioration in prospects for the Eurozone economy in particular next year EEF announced that it had reduced its forecasts for manufacturing growth from 2.2% to 0.9% in 2012. EEF Chief Economist Lee Hopley said short-term confidence had all but fallen away. "The signs of caution that had been emerging through the second half of this year have clearly become more entrenched as global growth concerns have escalated. There are not only question marks over wider manufacturing prospects at the beginning of 2012, but also the exports and investment needed to underpin sustainable growth." Tom Lawton, head of manufacturing at BDO said that despite the gloom, manufacturing looked set to perform well in relation to other parts of the UK economy in 2012. The figures showed a split in manufacturing performance by sector.. Basic metals, rubber and plastics and electronics both reported negative output and orders balances, the EEF said. Sectors like motor vehicles and mechanical equipment experienced a strong quarter, the association added. The pattern looked set to continue with other transport in particular looking strongly positive, on the back of strong demand from civil aviation, the EEF predicted.