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UK Manufacturing is Humming

Economic Prospects 2010

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The latest official statistics just released for the first 6 months of 2010 show very strong growth – the best since 1994 in fact. Growth of 1.4% in Q1 and 1.6% in Q2 suggests that the recovery in UK manufacturing is now well underway.

The British Chamber of Commerce (BCC) said engineering plants in the West Midlands were humming again, supplying the German car industry and export machine with specialist parts.

“Manufacturing has been doing better than services for the last three quarters; we have not seen that for a very long time,” said David Kern, the BCC’s chief economist. “The exchange rate effect has been powerful.”

The BCC expects manufacturing to grow 3.3pc this year compared to 1.4pc for services, though it is still unclear how much of this industrial rebound is a one-off snap-back after the collapse in the recession and whether it can be sustained. The body has lifted its economic growth forecast for this year from 1.3pc to 1.7pc, and next year from 2pc to 2.2pc.

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South East Manufacturing Is On The Road To Recovery

The latest South East Regional Intelligence Snapshot, prepared by the South East England Development Agency (SEEDA), has shown that manufacturing throughout the South East is steadily growing.

In addition, 41 per cent of manufacturing firms in the South East and London expect an increase in total orders over the next three months, which is more than any other part of the UK.

According to a separate piece of research by Cambridge Econometrics, the forecast for manufacturing output growth for the South East is predicted to be 1.7 per cent in 2010. This, combined with the Regional Intelligence Snapshot, represents the South East’s strongest manufacturing performance in two years.

Paul Lovejoy, Executive Director for Strategy at SEEDA, comments: “The reports show that growth is slow, but steady. Continued increases in business costs could slow the revival for manufacturing companies, however forecasts look positive. What is encouraging is that the South East is home to cutting edge industries, which are central to economic growth and future success.”

Prominent industries including aerospace, motor sport, marine, environmental technology and healthcare are based in the South East, with over 24 per cent of the 18,000 SMEs falling into this category.

The July issue of the bi-annual Economic Report, published by manufacturers’ organisation EEF and business advisors BDO LLP, provides a detailed overview of the status of the UK economy and manufacturing sector, and their prospects for 2011. Commentary from EEF’s economists on risks to the UK and global economy, the political landscape, potential changes to exchange rates and interest rates, and foreign trade opportunities, are covered in the 16pp report.

(Source: The Manufacturer)

Access useful resources:

Economic Prospects Report (Source: eef and BDO)

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