LONDON (MNI) – Manufacturing new orders were flat in the fourth
quarter and output is expected to be flat in the first quarter of next
year.
The Q4 Engineering Employers’ Federation survey suggests the
manufacturing sector, which fueled the UK’s initial recovery from the
credit crunch, is running out of steam. While manufacturing output
decelerated in Q4 at least it was still expanding, but it is expected to
flatline in the new year.
The EEF reports the manufacturing output balance in the Q4 survey
came in at 12, down from 27 in Q3, while the new orders balance fell to
zero from 12.
New export orders continued to grow, despite the intensification of
the Eurozone crisis, with the balance falling to 10 from 23 in Q3.
The forward-looking indicators make grim reading. The expected
output balance for the next three months falls to 0 from the 22 expected
back in Q3, while the total new orders balance plunges to -1 from 21.
The expected domestic new orders balance for the first quarter
drops to -9 from 12, and export orders also turns negative, at -2
compared with the 19 that had been expected for Q4.
“Short-term confidence has all but fallen away … There are not
only question marks over wider manufacturing prospects at the beginning
of 2012, but also the exports and investment needed to underpin
sustainable growth,” Lee Hopley, EEF chief economist, said.
With the outlook deteriorating, the survey shows job creation in
the manufacturing sector set to slow.
The employment balance for the next three months falls to 5 from
the 12 expected for Q4.
Other private sector data shows the manufacturing sector
contracting. The November CIPS manufacturing activity index fell to
47.6, well below the 50 breakeven level, and its lowest reading since
June 2009.
In light of the CIPS data, a positive Q4 manufacturing output in
the EEF survey and the anticipated flat outturn for Q1 appear better
than feared.
–London newsroom: 4420 7862 7491; email: drobinson@marketnews.com
[TOPICS: M$B$$$,MABDS$]
