Boost in overseas orders for manufacturing firms

Manufacturing firms were enjoying "buoyant" trading conditions amid rising demand from overseas customers, leading to better job prospects, according to a new report.

The Engineering Employers Federation forecast that manufacturing will grow by 3.7 per cent this year and 3.2 per cent in 2011, driven by the strength of poverseas markets.

Greater confidence was encouraging firms to hire staff, although mainly offering work to temporary or agency staff, said the report, based on a survey of over 500 companies for the three months to August.

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The EEF cautioned there was still a risk to growth next year despite the level of short-term optimism because of the weaker outlook in the US and economic cuts in the UK. Chief economist, Lee Hopley, said: "Manufacturers have continued to reap the rewards of growth in overseas markets with the upswing being felt across all sectors and regions.

"Not only has this continued to translate into better employment prospects but the recovery in investment has begun much earlier in the cycle than after previous recessions.

"However, we have to maintain perspective that the recovery is coming from a very low base and the risks to the economy in the medium term haven't gone away.

"The rebound in exports and modest improvement in investment will need to become much more firmly entrenched if we are to see a much-needed rebalancing of the economy."

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Tom Lawton, head of manufacturing at BDO LLP, which helped with the research, added: "The sector has shown a significant upturn since the dark days of the recession and this quarter's results show continued growth in output and orders and more expected for the next quarter, mostly driven by the restocking across most sectors of industry and exports."

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