UK manufacturing looks up

UK manufacturers are making the most of a strong global economy, with exports, investment and employment all expanding, according to a key industry survey.

Prospects for Britain’s manufacturers have continued where they left off in the first quarter of 2006, with more companies increasing output in the second quarter than at any time in the last ten years.

The second quarter 2006 engineering outlook survey, carried out by EEF, the manufacturers’ organisation, and RSM Robson Rhodes, suggests that the strong growth across the global economy, including the recent pick-up in Europe, is the main driver of growth for UK companies.

Confidence about the next three months is also holding up, having been the highest for eight years last quarter. This brighter outlook is one factor spurring planned increases in investment, as is the need to focus on raising productivity to counter rising costs. However, companies are less sure about the domestic market, suggesting that the Bank of England should continue to hold off any increase in base rates.