Recovery in manufacturing spreads

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The Independent Online
The recovery in manufacturing has spread to eight out of the 12 UK regions, and companies in all regions expect output to rise during the next four months, according to a new survey.

But a regional divide is re-emerging as the economy picks up. Industry in the South-east, East Anglia and Celtic fringe is buoyant, while the northern regions, Midlands and South-west remain more subdued.

In July only half the regions saw any growth in demand, but the recovery has spread during the latest quarter.

Northern Ireland, Wales and the South East have grown fastest during the past four months, a joint report from the Confederation of British Industry and consultancy Business Strategies said yesterday. Welsh and East Anglian businesses expect the biggest increases in output in the near future.

These four areas - Northern Ireland, Wales, East Anglia and the South East - were generally the most buoyant surveyed. Growth in orders was strongest in the first three, while export demand was strongest in Northern Ireland.

The report says: "The Northern Ireland numbers are so striking there must be a possibility they are in part a temporary phenomenon." Export demand in the region was much stronger than domestic orders.

Manufacturers in Northern Ireland have become the most pessimistic, the survey found, despite the stellar performance during the latest quarter. Along with the North, it reported one of the only drops in business confidence in the latest quarter. Orders have increased in most regions since the last survey. The three exceptions - the South-west, Yorkshire and the East Midlands - saw only marginal declines.

All areas expect orders to pick up during the next four months, but especially Wales and East Anglia. Levels of optimism are highest in the latter and Scotland. Planned investment is highest in Wales and the South-east.

The weakest region is the North, the only one where companies expect output to fall in the next four months. Hopes of improved orders so far have failed to materialise, selling prices have declined, and so has business confidence.

Yorkshire and Humberside saw a fall in output and orders but firms there expect a strong bounce back. In the South-west the past four months have been flat, but companies there too have become more optimistic about prospects.

The survey implied that employment in manufacturing nationwide stabilised during the third quarter but could fall again in the fourth. If so, almost all regions will end 1996 with lower manufacturing employment than a year earlier.

Employment last quarter fell in year-on-year terms in all regions except Wales, Northern Ireland and the South-west.

Costs have declined and price rises have been patchy. Manufacturers expect the fall in costs to continue, but hope to raise their selling prices in half the regions.