Manufacturing starts to feel the economic strain

However, the more stable and reliable quarterly figure for the first three months of 2008, showed a small, 0.3 per cent, increase over the previous quarter. During March, there were widespread falls in manufacturing, with a significant decrease in output of 1.3 per cent in the transport equipment industries. There were no significant increases. Over the quarter, there were significant increases in output of 2.4 per cent in the chemicals and man-made fibres industries and 1.8 per cent in the machinery and equipment industries. There were no significant decreases. Manufacturing output in the latest quarter was 1.0 per cent higher than the same period a year ago. Commenting on the statistics, Barclays Commercial Bank’s National Head of UK Manufacturing, Ray O'Donoghue, said the figures showed encouraging growth for the quarter. “This growth is being driven by chemicals and man-made fibres industries and underpinned by strong exports, mainly thanks to the weaker pound against the euro,” he continued. “The statistics reflect the mood of industry: on the whole the manufacturing sector is faring fairly well in the more difficult market conditions we are seeing, however, there is also a feeling of caution highlighted by the drop from February to March of 0.5 per cent. Although these monthly figures do tend to be volatile, this decrease also suggests the impact of the economic downturn could be starting to impact producers. “Those manufacturers facing the retail industry could feel the squeeze first if there is more of a slowdown on spending on the high street. “The concern for manufacturers in the months ahead will be the impact of rising inflation with steep increases in the price of raw materials, particularly steel and energy costs and whether they can pass these on or have to absorb them, decreasing profits. While undoubtedly markets will remain challenging UK manufacturers are as well positioned to cope as they have ever been.”