Manufacturing outlook - on the up again

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2014 has started strongly for manufacturers, according to our quarterly survey with BDO.


  • Output and orders balances firmly positive over the past three months
  • Export orders pick up at the start of 2014
  • Expectations for orders in the next quarter to strengthen further
  • Increased activity will lead to a pick-up in hiring and investment plans
  • Manufacturing to grow 2.7% this year

Positive Q1 for output and orders

A balance of 22% of manufacturers reporting rising output in the past three months, in line with the previous quarter's expectations. The positive trend was noted across all sectors with particularly strong output balances seen in motor vehicles and electronics.

The outlook for the next three months is stronger still with a balance of 29% of companies planning for an expansion in output levels and a balance of 37% expecting to see a further pick-up in orders - a record high in our survey.

% balance of changeSource: EEF Business Trends Survey

Export orders turn a corner

Over the past year the balance of responses on UK orders has been stronger than those for exports. The relative weakness in new export orders has been reflected in the disappointing official trade data. In the past three months export orders have improved with the balance of responses ticking up to 16%, from 7% last quarter and the highest since 2011q3.

Looking to the next quarter, manufacturers are expecting a healthy increase in their order pipeline. The balance of companies planning for increased UK and export orders surged to 30% and 33% respectively - another set of record high indicators in this quarter's survey.

% balance of change in ordersSource: EEF Business Trends Survey

Employment and investment set to grow

In response to improving outlook for production manufacturers have been recruiting and investment plans are being revised up for the year ahead. Over the past three months a balance of 30% of manufacturers have taken on new employees and a net balance of 31% is planning to increase headcount further in the coming quarter - another survey high.

The final record indicator is investment intentions - a balance of 34% expect to increase investment levels, with a consistently positive picture across all firm sizes.

% balance of changeSource: EEF Business Trends Survey

Manufacturing to grow 2.7% in 2014

Our forecast for manufacturing grow is unchanged at 2.7% this year following by 2.1% in 2015. Most sectors within manufacturing should expand this year with other transport, basic metals and mechanical equipment amongst the strongest performers.

We have nudged up our expectations for GDP growth this year to 2.6%.

% annual change in outputSource: EEF and Oxford Economics


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