Manufacturing posts best results in 16 years

News Article - 18 January 2011
Category: Business

The manufacturing sector has been labelled the driving force behind economic recovery as it posted its best performance in 16 years. Experts have forecast the sector will continue to outperform the rest of the economy in 2011.

Manufacturers' organisation EEF said the sector's strength will enable it to tackle the Government's spending cuts head on. Strong growth in export orders, particularly from emerging markets, has contributed significantly to the sector's recent progress.

In 2010, manufacturing exceeded predictions with 3.8 per cent growth. Similar results are expected this year, with predictions of 3.5 per cent growth for the manufacturing sector against 2.1 per cent for the economy as a whole. In 2012, experts predict growth of 3 per cent and 2.6 per cent respectively.

EEF Chief Economist Lee Hopley is confident that manufacturing will continue to play a proactive role in economic recovery: "Manufacturing looks set to be at the heart of the rebalanced growth the economy needs with sectors most exposed to international markets likely to post the highest growth."

However, manufacturers still face risks that may dampen growth. Inflation, which continues to be higher than forecast, could see manufacturing activity stifled as firms struggle to compete in international markets. The January VAT rise could see the Bank of England's two per cent inflation target exceeded throughout 2011, according to EFF.

Manufacturing firms will no doubt feel positive about this year's forecasts, but must not become overconfident. Any fallout from the VAT increase and the Government's Comprehensive Spending Review could seriously affect the ability of manufacturers to lead economic recovery, particularly if inflation continues to rise. Firms must take steps to improve profitability in order to emerge as strongly as possible, even if economic conditions deteriorate.

Access manufacturing and production software can help: its project and job costing module allows companies to compare actual costs against up to 10 pre-set budgets. Companies can use this data as an indicator of current operational efficiency; if costs are significantly out from predictions then inefficiencies can be fixed in order to bolster future financial performance.

For more information, please call Access on 0845 345 3300.

Article keywords:

---

More industry news

• Think tank warns UK may have already slipped back into recession
• Growing demand for HR staff in technology and international sectors
• Boosting business growth a ‘priority’ to avoid Eurozone slowdown
• HMRC launches alternative disputes pilot scheme this week
• December employment statistics disregard gloomy recruitment predictions
• Eurozone manufacturing PMI shows modest improvement
• UK scores highly for economic governance by ratings agency
• Government launches two-year project focusing on manufacturing sector
• Burden of regulation on UK businesses ‘too high’

Back to news home page »