Expectations about future prospects UK manufacturing still powering ahead

Expectations about future prospects UK manufacturing still powering ahead ; Britain's manfuacturers continue to operate at record levels but worryingly for inflation prospects a lot more firms intend to raise prices. Over the last three months, output and new order balances were +33% and +32% respectively, according to the latest survey by the manufacturers' trade body the Engineering Employers' Federation (EEF). Both numbers were broadly unchanged from last quarter's record levels.

Export markets (+26%) were again the driver, though the domestic order balance improved slightly to +22%. There was also an improvement in the number of firms looking to recruit, with the figure of +23%, the strongest positive balance in the survey’s history.

Investment intentions doubled from the last quarter to +15% but there was also a significant jump in the number of companies expecting to raise domestic (+16%) and export prices (+12%). This largely reflects an increase in the cost of raw materials, the EEF said.

Expectations about future prospects also remain positive, with a balance of 17% of companies expecting output to increase in the next three months, and 15% expecting orders to expand, though both of these are weaker than the previous three months.

The EEF predicts the economy will grow by 1.8% and 2.1% in 2010 and 2011 respectively while manufacturing will grow by 3.8% in 2010 before easing back slightly to 3.2% in 2011.

“Manufacturers are ending the year on a high and should enter 2011 on a strong footing. However, the backdrop to an ongoing recovery through 2011 remains an uncertain one," EEF chief economist, Lee Hopley, said.

"The strong bounce back has also brought challenges, with some manufacturers’ struggling to get the skills they need and facing rising costs,” she added. For the latest updates PRESS CTR + D or visit Stock Market news Today

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