Manufacturers' outlook for their firms' performance

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All this week we are blogging about our Executive Survey 2016, published in partnership with Aldermore.

As yesterday’s blog from Maddie showed, risks are prominent in manufacturers’ outlook for the year ahead, and companies have some doubts about the pace of growth in the global economy in 2016. In this section we discuss how this pessimistic outlook is affecting manufacturers’ views of their own firm-level performance this year.


Key points:

• 2015 looks, on aggregate, to have been weaker than manufacturers had expected this time last year
• The reality of global challenges prompts a downward adjustment to forecasts for the year ahead
• Nonetheless, manufacturers expect domestic sales, export sales and employment to grow modestly

A quick look back at 2015

After a strong 2014, manufacturers were more nervous about 2015. The supply chain effects of the oil price slump and the lingering concerns about the future of the eurozone both weighed on confidence. This was evident in the lower expectations about industry conditions overall and relatively fewer companies forecasting growth in sales, profits and employment.

While many of manufacturers’ predictions were on point last year, others were somewhat off track. For example, over half of companies exporting to Asia were expecting to see growth from those markets support their business, but the slowdown in China had a direct hit on exports from some UK sectors. In addition, some of the sub-sectors – notably metals – that had been planning for rising output and orders in 2015 saw the reverse.

Cautious expectations for 2016

Looking at 2016, there is a familiar degree of caution in our survey responses. With more subdued confidence overall across manufacturing, this is inevitably reflected in lower expectations about growth in some key business indicators.

Industry conditions:

  • Just under a third of our respondents expect to see conditions in their industry improve over the next 12 months, this is down slightly from the optimistic 37% at the start of last year.
  • A growing proportion of manufacturers are planning for industry conditions to take a turn for the worse – 29% versus 17% a year ago.

Export sales:

  • Companies expect moderate export sales growth in the year ahead, the high degree of uncertainty about the outlook for the global economy has led to a fall in this indicator from previous years.
Chart: Percentage balance of change expected in export sales
Source: EEF Executive Survey 2016

Domestic sales:

  • A drop in forecast sales in the domestic market for 2016 is somewhat more widespread across manufacturing.
  • UK demand, a previous bright spot for manufacturing, started to wane last year, and while there are still predictions for modest growth in the next 12 months, this is a far cry from the levels of optimism about the home market seen a couple of years ago.
Chart: Percentage balance of change expected in domestic sales
Source: EEF Executive Survey 2016


  • Looking at how this will all feed through to manufacturers’ workforce plans, we see that after two years of very positive recruitment plans – which have also been seen in the official manufacturing employment data – the outlook has moderated significantly.
  • The transport sectors continue to lead the pack on employment intentions, which tallies with expansion announcements from a number of the major OEMs.

Chart: Percentage balance of change expected in permanent employment
Source: EEF Executive Survey 2016


For more detail, download and read the report today.



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