Intelligence Briefing 10th December 2015

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In this issue: Weekly Focus – EEF’s latest quarterly Manufacturing Outlook report published | Discussing business rates and connectivity with Labour frontbench | Anglo-French Conference (1-3 February, Rennes, France) | In the Media | Week in Review | The week ahead | Blogs from this week

Weekly Focus – EEF’s latest quarterly Manufacturing Outlook report published

This week EEF published its fourth quarter Manufacturing Outlook report. The final months of 2015 mark the third consecutive quarter in which we have reported a fall in the key output and orders balances in our survey, all of which now stand in negative territory.

This clearly signals a disappointing end to the year but while the results of our latest survey reinforce the view that manufacturing is facing some significant challenges. They do not necessarily signal that those challenges have ramped up to a great extent over the quarter. Indeed, looking at the sector results, those that have been hardest hit by falls in oil and gas investment and slower world trade growth – metals, mechanical and electrical equipment – remain the most downbeat about prospects over the quarter.

Wider confidence about business conditions and the UK economy over the next 12 months has dipped, leading to net falls in both employment and investment plans. This would confirm a cautious take on the negative forward-looking output and orders balances in our survey, which point to lingering concerns about trading conditions in the early part of 2016.

The main headlines from the survey were:

  1. Output balance falls for fourth quarter in a row, to lowest level since 2009q3. But steeper q-on-q drop seen in 2014q3 following oil price drop.
  2. Sector differences prevail – basic metals and electrical lead the falls, vehicles and chemicals still positive on output.
  3. Export picture deteriorates further with less optimism about European markets and over half citing no improvement in demand in any market.
  4. But, domestic picture has also become less supportive – UK orders balance also records another negative quarter. And confidence about UK economic outlook in next 12 months takes a knock.
  5. Weaker results on output and order prompt first negative employment and investment balances since 2010q1.
  6. Manufacturing growth revised down this year (-0.1%) and next (+0.8%).

You can view a link to the press release here.

For further information please contact Lee Hopley, Chief Economist

Discussing business rates and connectivity with Labour frontbench

EEF met this week with Chi Onwurah MP to discuss the current state of manufacturing. We briefed her on ongoing issues around the tax treatment of capital equipment including the disincentive of having plant and machinery included in the assessment of site values for business rates. We also discussed the importance of internet connectivity to manufacturing and our current survey the results of which will be published next year.

For further information please contact Maddie Scott, Senior Policy Researcher

Anglo-French Conference (1-3 February, Rennes, France)

NDI, EEF’s defence and security experts, are bringing together SMEs from the UK and France with the aim of identifying collaborative business opportunities across both countries and in third markets.

Entitled ‘Systems Engineering, Simulation and Training’ the conference will begin on the evening of 1 February with a networking reception and dinner at which our speaker will be Patrice Caine, CEO of Thales Group. The next day we will hear from senior government and industry speakers from both countries followed by breakout groups and a business-to-business (B2B) fair at which conference delegates will have the opportunity to meet potential customers, suppliers and partners on a 1:1 basis.

Concluding on the morning of 3 February there will be a series of briefings by the UK and French armed forces on their current programmes and future requirements.

The conference is open to all and more information about it can be found on the NDI website - www.ndi.org.uk or www.doingbusinesstogether.info or from Kelly Maddison on 0845 111 1141.

Book your place by mailing enquiries@ndi.org.uk with your details or call the NDI team on 0845 111 1141.

In the media

The results of EEF’s quarterly manufacturing outlook were reported in The Financial Times (£), The Times (link unavailable), The Daily Telegraph, The Guardian, The Independent, The Daily Mail, BBC News and Sky News. Chief Economist Lee Hopley was also interviewed on BBC News, Sky News and BBC Radio 4, and Midlands Region Director Richard Halstead was interviewed on BBC Midlands.

EEF’s response to speculation that a decision on London airport expansion is to be delayed featured in The Times (£) and The Guardian. The Financial Times (£), The Times (£), The Guardian, The Independent (link unavailable), BBC News and Sky News featured our comments on the latest IoP data.

UK Steel Director Gareth Stace was interviewed about the sale of Tata’s Scunthorpe site on BBC Look North and BBC North.

For more information contact Sophie Carroll, External Affairs Executive

Week in review

Index of manufacturing

Manufacturing output fell 0.4% between October 2015 and September 2015. Over the month, there were decreases in 7 of the 13 manufacturing subsectors covered. The biggest falls in output were focused on mechanical and electrical equipment, but there were strong increases in pharmaceuticals and motor vehicles output.

Index of manufacturing

Manufacturing output fell 0.4% between October 2015 and September 2015. Over the month, there were decreases in 7 of the 13 manufacturing subsectors covered. The biggest falls in output were focused on mechanical and electrical equipment, but there were strong increases in pharmaceuticals and motor vehicles output.

UK Trade

The UK’s trade deficit on goods widened by £2.5 billion between the 3 months to July 2015 and the 3 months to October 2015. This was mainly attributed to a £1.6 billion fall in fuel exports and a £1.3 billion rise in imports of machinery and transport equipment. The UK’s trade in goods deficit in the three months to October 2015 stood at £31.6 billion.

The week ahead

15th December: Consumer prices 16th December: Labour market statistics

Blogs from this week

7 Dec 2015
Any festive cheer for UK manufacturers? by Lee Hopley

7 Dec 2015
A look at the week ahead by Zach Witton

8 Dec 2015
No hat-trick for manufacturing by Zach Witton

9 Dec 2015
What does last Friday's OPEC meeting mean for the future of oil prices? by George Nikolaidis

9 Dec 2015
5 charts that show what's happening with exports by Felicity Burch

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