In its first industrial trends survey of the year, employers’ group the CBI, reported that demand for manufactured exports has levelled off for the first time since October 1993. Manufacturers’ optimism about export prospects for the year ahead also fell, dampened by the strength of sterling. Domestic demand for UK-produced goods continued to improve but the pace has slowed.
Manufacturers have firm plans to invest in plant and machinery over the year, but their intentions are less buoyant than in October 1995. Increased efficiency is the main driver followed by replacement of equipment. Expanding capacity is cited by under a third of firms as the main reason to invest.
Despite manufacturing industry’s slowly rising employment levels over the past three years, it has a declining share of employment in the UK. Official figures show manufacturing employees made up 18% of the total UK workforce in 1996 compared with 20.5% in 1990.
The engineering sector boasts an average return on capital ahead of the UK industrial average for the first time, says research group CCN Business Information. Pre-tax margins are more than double than at the start of 1995 – 5.7% from 2.9%.