OPTIMISM AND OUTPUT IN UK MANUFACTURING RISES BUT OUTPUT IN EURO AREA SEES FALLS

Both the optimism and output levels of UK manufacturers have seen marginal increases according to BDO Stoy Hayward’s latest Manufacturing Optimism Index. However, manufacturing output in the Eurozone continued to fall.

The UK Manufacturing Optimism Index, which measures medium-term business confidence in the manufacturing sector, was at 86.4 in April 2009. This figure is up 4.3 points from the 82.1 points seen in January this year. Manufacturing optimism in France, at 89.7, and in Italy, at 93.8 were both unchanged between January and April but remained far below the 100 mark, which represents trend levels of growth in the sector. Also seeing off a decline was optimism in German manufacturing, which recorded its first increase for two quarters. The optimism index in April was at 87.1, a 3.9 point increase from January. The depreciation in the Sterling, which made UK goods more competitive against those from overseas, helped drive a modest improvement in the output index for UK manufacturers. The BDO Manufacturing Output index, a measure of order book strength and short-run turnover expectations one quarter ahead, stood at 83.6 points in April. This was a 0.6 point increase from the 83.0 points seen in January. The output index, however, paints a gloomy picture for manufacturing in the Eurozone with the manufacturing output index declining over the quarter, albeit at a much slower rate than previously. Impacted by a strong Euro, which led to less competitive prices in the Eurozone, the BDO Manufacturing Euro Area Output index fell to 84.5 in April from 85.1 in January, a modest decline compared to the 7.9 point fall from October to January. Robin Lloyd, Head of Manufacturing at BDO Stoy Hayward in Southampton, said: “Until now, confidence in UK manufacturing this year has been in freefall and despite conditions in the labour market being likely to worsen in the coming months, some manufacturing businesses are starting to view the future with less trepidation. The indicators also suggest that the combination of government initiatives are beginning to kick-in and the pressure that has been applied on banks to increase their lending is beginning to take shape.” -Ends- Word Count: 352