Manufacturers’ confidence falling

The Engineering Employers Federation (EEF) said exports were still growing, but the domestic market was “flat”, leading to an easing of investment and recruitment plans.

A survey of more than 450 companies showed that the global economic volatility was having a “marked impact” on confidence, leading the EEF to reduce its forecast for manufacturing growth next year from 2.2 per cent to 0.9 per cent.

Output and orders fell from historic highs at the start of the year to levels closer to average, the study found.

EEF chief economist Lee Hopley said: “Manufacturing has been a key pillar in the recovery so far and it looks like the sector will still end the year on the up, with positive output and orders responses posted over the past quarter. However, short-term confidence has 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 accounting firm BDO LLP, which helped with the research, added: “Although exports have maintained a relatively strong performance in the quarter, the continuing problems within Europe, which is by far our biggest export market, are clearly having an effect and generally increasing a feeling of nervousness and lack of confidence.”