Manufacturing recovery continues to flatline

The latest figures for the month of November registered no change on the previous month while the more reliable figure for the three months to November showed a modest 0.3% improvement when compared with the previous three months. Between October and November, output increased in six of the industry's sub-sectors and also fell in six. The largest positive contribution to overall output was an increase of 3.5% in the transport equipment industries. The biggest negative contributions to overall output were decreases of 3.0% in the machinery and equipment industries and 1.0 per cent in the food, drink and tobacco industries. Year on year, the index of manufacturing for November 2009 was 5.4% lower than in November 2008. The machinery and equipment industries together with the basic metals and metal products industries were most culpable for the fall. Over the course of the 12 months, output decreased in 10 of the 13 sub-sectors and rose in three. The largest contributors to the decline were the machinery and equipment industries which fell by 17.4 per cent and the basic metals and metal product industries which decreased by 12.1 per cent. The largest increase in output over the same period was 2.8 per cent in the transport equipment industries. However, Barclays head of manufacturing, transport and logistics Graeme Allinson (pictured) said confidence in manufacturing was growing in the UK and globally, a trend that appeared more sustainable than the false dawns witnessed last year. He went on: "Manufacturers have now largely come to terms with the fact that today's conditions should be considered the new normal, with pre-recession output peaks something of an aberration. With few major mergers and acquisitions on the horizon and a focus on organic growth, deleveraging across the sector continues and progress made amongst manufacturers in coming years is unlikely to be as debt fuelled as in the previous decade. "While there remain political and commercial uncertainties in the UK and abroad that will certainly impact demand, it is still likely that slow but positive growth will be a mark of the coming year in manufacturing." David Raistrick, UK manufacturing industry leader at Deloitte, said that while it was disappointing and a little unexpected to not see growth in the last month, it had to be remembered that the UK had a strong base in the advanced technology arena - parts of which were often the first to suffer in a recession and may lag behind other areas in recovery. "However, the UK's overall industrial production has increased which is positive news. I anticipate that as the EU and US pull out of recession, their demand will increase with re-stocking starting to take place at different stages in the supply chain. Going forward, the effect of the low value of sterling, coupled with the comparative strength of the Euro will help drive our export market in overall terms, thus giving our economy the boost that it needs. "The manufacturing sector's role in lifting the UK out of recession should not be underestimated. We must remember that UK industry still represents close to 20% of GDP and that the UK remains the 6th largest exporter in the world." A recent survey conducted by Deloitte and Works Management showed that confidence is returning to the sector with 55% of UK manufacturers expecting exports to increase over the next two years. In the same survey, the overwhelming majority of UK manufacturers confirmed their commitment to maintaining staff levels.