Over the last few weeks there has been a deluge of economic data and on the face of it, a lot of the stats are painting a rather confusing picture of the health of the recovery. Today we add our own survey results into the mix.
EEF's Manufacturing Outlook, in partnership with BDO, takes the temparture of manufacturers' output, order books, employment prospects and investment intentions over the past quarter and gauges expectations for the coming quarter. Since the beginning of the year all indicators have been steadily improving and last quarter some components of our survey hit an historic high. The latest information we're getting from manufacturers points to a similarly robust third quarter with the bouce in output and orders stronger than expected.
For many companies this was also translating into some recruitment and positive investment intentions for the first time since 2008q2. On both counts this would suggest that there is a degree of confidence about the recovery amongst manufacturers and expectations that output and orders are set to increase in the next three months would support this.
But does this mean our survey is at odd with the rather less upbeat statistics of recent weeks? Not necessarily. Importantly - manufacturing indicators are pointing intthe direction of expansion. And the importance of demand across export markets has been a more consistent feature of a indicators. The European market - led by Germany - has been performing better than expected and UK manufacturers have been making good in roads into markets in the Middle East and Asia, where demand remains firm. Some further analysis of our survey shows that companies with a greater dependence on export markets are much more likely to report rising output over the past three months.
While companies are optimistic that the recovery will continue into the final months of this year there is still some caution - where will the forthcoming spending cuts hits and is the global recovery likely to be sustained over the coming year. There may be some initial signs of rebalancing in the economy - with exports and investment showing signs of growth - but there is still some way to go.