UK manufacturing forecast cut; Jobs market slows
EEF (Engineering Employers' Federation), UK manufacturers' lobby group, has cut its forecast for growth in 2015 in half because of a "rollercoaster of risks" taking its toll on UK manufacturing. Meanwhile, a survey on jobs reports that permanent position placement by recruitment firms is at a 27-month low.
The latest quarterly EEF/DLA Piper Manufacturing Outlook survey shows that a ‘rollercoaster of risks’ caused by global economic uncertainty is taking a toll on UK manufacturing. Bright spots provided by domestic consumer demand and construction activity are not enough to hold the shadow of global factors at bay, according to the group. Based on these latest findings, the current economic outlook and recent weaknesses in official data, EEF is halving its 2015 manufacturing growth forecast to 0.7%:
All major survey indicators down on the last quarter — output and orders turn negative and output falls to lowest level since Q4 2009;
Domestic demand weakens further with second consecutive negative balance;
New export orders edge down again to hit a six year low and pressure mounts on export margins;
Recruitment and investment plans hang on to positive ground, but confidence for the year ahead again edges down;
Manufacturing growth forecast revised down to 0.7% from 1.5% in Q2 and 1.7% at the beginning of the year.
A global list of economic woes — including uncertainty in Europe, China and Greece — "is casting a shadow over UK manufacturing, according to the latest Q3 Manufacturing Outlook survey from EEF, and DLA Piper, the global law firm."
Lee Hopley, chief economist at EEF, said today: “While UK data has continued to point to solid growth, UK manufacturing is having to contend with a rollercoaster of risks from the rest of the world and the white-knuckle ride is starting to take its toll.
“We’ve seen the future of the Eurozone on the line once again, turbulence and uncertainty over China and Greece and, of course, oil and gas are still a concern. Against this backdrop it’s no surprise that confidence is faltering and UK manufacturers are feeling less optimistic about their growth prospects for next year.
“However, it’s important to note that confidence has dipped rather than nose-dived and if the global drag lets up anytime soon then UK manufacturing should very swiftly get back into its previous stride. Industry and Government must continue to work closely together to help offset the risks and support investment and innovation in the sector.”
The Recruitment and Employment Confederation (REC) and KPMG Report on Jobs, published today, shows that growth of staff appointments eased further in August although permanent placements continued to rise in the month, the rate of growth eased further, hitting a 27- month low. Similarly, temporary/contract staff billings increased at the slowest pace since May 2013.
...restricted by skill shortages: The availability of candidates for permanent roles fell further in August, with the rate of decline accelerating to the sharpest for a year. Temporary/contract staff availability was also down, with the latest drop the most marked in ten months.
Salary growth remains strong: Starting salaries for people placed in permanent roles continued to increase in August. The rate of growth remained strong relative to the survey’s historical average. Temporary/contract staff pay rose further, albeit at the slowest pace in 16 months.
...supported by robust demand: Vacancies continued to rise at a marked rate in August. Demand for permanent staff continued to rise at a faster pace than that for temps, with the latter seeing the slowest growth for 26 months.
Regional and sector variation: Midlands-based consultancies signalled the strongest growth of permanent placements during the latest survey period, while those in London recorded the weakest increase. The Midlands saw the fastest growth of short-term appointments, while the slowest expansion was signalled in the North.
The report says private sector permanent roles saw the strongest growth in August. In contrast, public sector permanent vacancies rose only marginally. Nursing/Medical/Care remained the most sought after category for permanent staff in August. The slowest (albeit still solid) rate of expansion was signalled for Hotel & Catering workers. As was the case for permanent staff, Nursing/Medical/Care posted the fastest increase in demand for temporary/contract workers in August. Executive/Professional was the slowest-growing category.