Intelligence Briefing 9th June 2016

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In this issue: Weekly Focus – Latest Manufacturing Outlook survey out now | EEF calls for greater focus on broadband reliability and resilience | Meeting with key Treasury Minister | Business development opportunities at the Farnborough International Air show | In the media | Week in Review | The week ahead | Blogs from this week

Weekly Focus – Latest Manufacturing Outlook survey out now

Our latest Manufacturing Outlook Survey suggests that the worst may now be behind the sector. The results indicate the drag on UK manufacturing from weak global growth, the collapse in oil and gas investment, and the crisis in the steel sector is easing. Even though key balances remained negative in 2016q2, they improved and are expected to do so again in the next quarter.

The past three months saw lingering weakness in the mechanical equipment and basic metals sectors, both of which are still feeling the consequences of oil and gas companies cancelling investment. Yet these effects now look to have bottomed out. It’s important to note that these trends haven’t been evident across all sectors in our survey. The chemicals, transport and food and drink sectors continued their run of positive output and orders balances in the past three months.

Demand conditions across most industry segments now seem to be turning a corner but we have to base this on the working assumption of manufacturers that the UK will avoid the turmoil and uncertainty of leaving the EU. This underpins our forecast of a return to growth for manufacturing as whole in the second half this year.

While almost all indicators are heading in the right direction, the one exception is investment plans. The balance of companies planning to increase capital expenditure over the next year fell further over the past three months and remains at its lowest level since the end of 2009.

Smaller companies seem particularly cautious about investment. Possible explanations include the need for expected improvements in output and orders to be realised before investment increases follow, and the upcoming referendum. While there are few concrete signs that referendum is having a tangible impact on manufacturing right now, the potential uncertainty may be weighing disproportionately on small companies.

For more information contact Zach Witton, Deputy Chief Economist

EEF calls for greater focus on broadband reliability and resilience

EEF submitted evidence to the Department for Business Innovation and Skills/Department for Culture Media and Sport joint review of business broadband – an overview of our submission can be found here.

In our submission we made the case that speed should not be the only concern when it comes to broadband policy – reliability, resilience and a future-proofed network are equally important.

Internet connectivity is as important as other utilities and we can’t afford to wait and see if remedies by Ofcom deliver on these additional concerns of reliability and resilience a decade from now. BIS/CMS must have their own clear policy objectives of what good broadband for businesses should look like and the indications that will show progress by internet service providers is on track.

We’ll be making the case to government for a clear statement of intent for a full fibre broadband rollout to business and households. They should also reserve the option to intervene directly if the market fails to deliver. At the moment manufacturers have had to intervene in the market directly to purchase expensive leased lines to compensate for poor provision.

We are keen to continue to use feedback from members both good and bad and would be interested in writing up case studies to use anonymously. Please get in touch if this is something you would be interested in helping with.

For more information contact Chris Richards, Senior Business Environment Policy Adviser

Meeting with key Treasury Minister

This week EEF met with David Gauke MP, Financial Secretary to the Treasury, with whom we have developed a strong relationship over the past six years. This meeting provided an opportunity for us to discuss the state of the manufacturing sector and the economy more widely, and we also discussed the government’s review of business rates and briefed the Minister on our position on the government’s apprenticeship levy proposals.

For more information contact Rocky Lorusso, Head of Government Affairs and Stakeholder Engagement

Business development opportunities at the Farnborough International Air show

EEF (through our supply chain specialists NDI) has secured the opportunity to introduce EEF members to visiting French and US commercial representatives at the forthcoming Farnborough International Air Show on 11-17 July 2016, offering you the opportunity to identify new customers, suppliers and business partners.

If you are planning to be at Farnborough either as a visitor or exhibitor and are interested in finding out more about this fantastic business development opportunity then please contact NDI on 0845 111 1141 or email kelly.maddison@ndi.org.uk or enquiries@ndi.org.uk

In the media

This week saw a range of economic data with our Q2 survey covered in The Times, FT, Daily Mail, Guardian and Daily Telegraph. Later in the week our comments on the latest industrial production figures were reported in the Daily Mail, Guardian, Daily Telegraph and FT. UK Steel responded to the latest discussions with government following the Steel Council summit with comments reported in the FT and Guardian

For more information contact Mark Swift, Head of News

Week in review


EEF Manufacturing Outlook (Q2

The key output and orders balances remained negative for the fourth consecutive quarter. Nevertheless, they improved and are expected to continue to do so over the coming three months. There was more evidence that the drag from manufacturers embedded in the oil and gas supply chain is easing.

Index of production

UK manufacturing production surged 2.3% m/m in April, the largest increase in more than three years. After the mixed picture across manufacturing in recent months, the performance of most sectors turned positive.

UK Trade

The trade deficit for goods narrowed in April as a pickup in exports outpaced that of imports. Exports to both the EU and non-EU countries were higher than in the previous month. The largest increase was in exports of chemicals, followed by machinery.

The week ahead

14th June: Consumer price index
15th June: Labour market statistics
16th June: EEF Pay Bulletin

Blogs from this week

06 Jun 2016
Weekly round up of forthcoming data releases by George Nikolaidis

06 Jun 2016
Is UK manufacturing about to turn a corner? EEF's latest quarterly snapshot of business conditions in UK manufacturing by Lee Hopley

08 Jun 2016
Manufacturing gets off to a good start in 2016q2, Yet month-on-month data can be volatile by Zach Witton

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