North East manufacturers have seen an historic high in activity over the last three months.
A survey published by EEF has shown that the output balance for the likes of Nissan have risen to 50 per cent.
The trend can be seen nationally, but risks are mounting.
There has been a fall in investment, with the balance down to 0 percent, proving an uncertain economic outlook.
The fall is suspected to be due to disruptions caused by recent Brexit negotiations with the EU.
It’s according to the major survey published today by EEF, the manufacturers’ organisation and accountancy and business advisory firm BDO LLP.
Metal manufacturers in the region are likely to be benefiting as the sector approaches the peak of its cycle, as well as rising prices supporting margins.
Conversely the export balance was flat in the region for the second consecutive quarter, down from the peak at the start of the year.
The overall upturn in activity has spurred employment activity in the region with the employment balance, while down, remaining healthy at 25%.
Conversely our survey points to a significant fall in investment, with the balance down from 18% to 0%, illustrating the uncertain economic outlook.
Nevertheless the largely positive trend is reflected nationally, as industry demonstrates its resilience but risks are mounting.
Central expectations is that manufacturing growth is still on the cards this year and next, but risks to that outlook are increasingly present.
Commenting Richard Halstead, EEF Director of Member Engagement for the North said:
“There are both reasons for cheer and caution in our latest survey. UK manufacturers in many industries are continuing to benefit from growth in the global economy; expanding their exports and driving ahead with new investments. But this is not an industry-wide phenomenon. Trade tensions, the Brexit debate reaching a crescendo and some wobbles in confidence about the UK’s economic outlook continue to make their presence felt across a number of manufacturing sectors. If these sources of uncertainty prove to be short-lived then growth across manufacturing looks like more of a sure thing next year. If not, then government will need to act to prevent investment plans from faltering.”
Steve Talbot, Partner and Head of Manufacturing at BDO in the North East said:
“With the output balance reaching historic highs in the last three months thanks to buoyant domestic demand, manufacturers in the North East continue to demonstrate resilience and market confidence, despite ongoing political uncertainty. This optimism has fuelled a pick-up in investment and recruitment.”
“The Government cannot afford to ignore the importance of UK manufacturing as we endure the twists and turns of EU negotiations and must minimise disruption to the sector by ensuring that Britain remains open for business with the EU as well as other key international markets.”