South east: Manufacturers start to feel chill

Despite posting a 12th consecutive quarter of growth, manufacturers across the South East are starting to feel the chill from a slowing economy, according to a major survey published by EEF, the manufacturers’ organisation, and Grant Thornton.

Even with output holding up over the last few months, the EEF/Grant Thornton survey shows that a stagnant UK economy and a sharply deteriorating eurozone are now impacting on all sectors of manufacturing.

While output continues to hold up well for South East manufacturers, total new orders show a negative balance of -9% for the last three months, with a marked downturn in UK orders. Margins are also being squeezed. That said, prospects for new orders in overseas markets remain positive, with over 80% of respondents reporting increases or stability.

EEF believes it falls to the government to address the rising risks of further economic weakness. By bringing forward policies that buttress business from gathering economic headwinds, EEF believes government can minimise cuts to jobs and investment and pave the way for an eventual upturn.

Commenting, EEF Chief Economist Steve Radley said: “Manufacturing has shown considerable resilience in the face of a credit crunch, a global economic slowdown and a massive increase in its costs. But there are now clear signs that these pressures are starting to take their toll on companies

“Given the Bank of England’s hands remain tied in the short term, it is now essential the government tackles this turning point for the economy head on. It must avoid adding any further costs to business and put in place policies which will provide the building blocks for an upturn.”