Manufacturing Outlook 2014q4

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Today sees the launch of our final Business Trends Survey for 2014. The picture remains one of expansion in the final months of 2014.

But first the story so far…

• Manufacturing output has risen in the past three quarters leaving production levels 2.1% higher than the start of the year.
• Manufacturing workforce jobs up 1.7% in 2014H1 compared with a year ago.
• Business investment across manufacturing posted its highest quarterly reading in 2014q2 in nine years.
• Manufactured exports have fallen in each quarter this year.
• In 2014H1manufacturing productivity (output per hour) was 3.6% higher compared with a year ago. Across the whole economy productivity fell 0.1%.

The final furlong

In the final quarter of this year manufacturers are reporting a relatively strong finish to the year. The balance of companies reporting an increase in output picked up to 17% from 10% in the previous quarter; the new order intake balance was stable at 10% and the balance of companies taking on new workers edged higher to 21%.

Mind the growing gap

While orders held steady in the final three months of the year, the gap between UK and export orders widened. The balance of responses on new export sales has been negative for two quarters running, continuing the downward trend in exports over the course of this year. UK sales, on the other hand, edged higher.

Headline results

% balance of change

trendsq4 

Different sectors, different stories

Output and orders growth was not evenly spread across all manufacturing sectors. Motor vehicles remains ahead of the pack with strong positive balances on all measures. Good domestic and UK demand helped boost electronics output and order over the quarter, while metal products and mechanical see growth on the back of domestic demand. Basic metals, however, continues to see challenges at home and abroad.

2015 should get off to an OK start

Expectations have edged down for the start of 2015. Output and orders should still increase, but balances have become more realistic compared with those reported earlier this year. Investment intentions are firmly positive and recruitment is set to continue in the next quarter. Following solid growth of 3.5% in 2014, the pace of growth will ease to 2% in manufacturing next year.
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