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A number of recent surveys have shown that things are looking better in the manufacturing sector with optimism about orders and output increasingly evident.

Recently we spoke to a number of manufacturers about how things looked for their businesses. Although not universally positive, most companies noted that demand had improved and things were looking stronger.

Some key points to note:

A number of companies said they were at, or close to, capacity:Increased demand has meant that a number of companies are operating closer to capacity. In some cases manufacturers reported concerns about their suppliers' ability to increase production in response to increased demand – something manufacturers' flagged as a potential issue in our Executive Survey at the start of the year.

Companies are looking at increasing employment:As a result of nearing capacity, a number of companies said they were planning to increase their headcount, a couple of manufacturers mentioned increases of more than 10%. However, this was not universal; other manufacturers said they would look to boost their productivity.

Companies looking at increasing investment:Another response to increased demand and tighter capacity was investment. A number of companies said they were considering increasing their expenditure on capital equipment or expanding their sites.

So good news from manufacturers then, but given the relatively unbalanced nature of the recovery to date, a key question for 2014 is the extent to which investment intentions will actually materialise. As such, next month's Budget must send out a powerful signal that government will continue to act on delivering a competitive business environment that will give the private sector confidence to invest.


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