Manufacturers’ bullish expectations at the beginning of 2014 have eased back, with those expecting UK economic conditions to improve in the coming year almost halving from 70 percent to 37 percent.
The findings, from the annual EEF/Aldermore Executive Survey, also reveal a lack of confidence in global economic conditions, with some 38 percent expecting them to take a turn for the worse in 2015 (compared to just five percent at the beginning of 2014).
“Manufacturers’ confidence at the beginning of last year was very high - one year on and, while still positive, it has very evidently eased back. The realities of 2014 have taken the edge off future forecasts and what we are now seeing as we head into 2015 is a far more muted outlook, tempered by a backdrop of difficulties in the EU and wider geo-political concerns,” commented Terry Scuoler, Chief Executive of EEF.
Despite this pessimistic outlook, however, almost seven in ten manufacturers (69 percent) says they expect to improve productivity, with 58 percent expecting to boost UK sales and 49 percent planning to take on more permanent staff.
Export sales also look positive – albeit expectations are down on last year. Just under half of manufacturers (49 percent) expect to see an increase in 2015, while three in ten (30 percent) expect sales to remain steady. The hotspots for export growth are expected to be North America, Asia and South America while, in line with ongoing economic and geo-political uncertainty, manufacturers see Europe and the Middle East as not so favourable.
In fact, geo-political risks are a key concern for many manufacturers, finds the survey, along with rising input costs, significant shifts in exchange rates and upward pressure on pay.
With these factors on the horizon, the jury is out over whether 2015 will be a year of risk or opportunity. While a third of manufacturers see more risks than opportunities for their business in the year ahead, these are exactly matched by those who don’t.
They are, however, agreed on what 2015 means for activity, with top priorities being improving marketing and branding, launching a new product or service and consolidating UK activity.
The year’s focus will be on consolidating rather than speculating, with riskier expansion activities way down on their list of priorities. This explains why, despite the more pessimistic outlook, a stronger than average, two percent manufacturing growth is forecast for 2015, which down from last year’s 3.5 percent, but still strong.
Mark Stephens, Deputy CEO and Group Commercial Director at Aldermore, commented: “Although confidence has fallen back, it is great to see that the manufacturing industry is predicted to continue to grow in a way that fuels the UK economy during 2015.”