Last year’s growth in the engineering industry rose slightly to 3.5%, more than double the rate in manufacturing industry as a whole.
Renewed growth was driven by a stronger home market as well as continued buoyancy in export demand before the effects of sterling’s rise began to be felt towards the end of the year.
The outlook for 1998 is considerably weaker, according to the latest forecasts from the Engineering Employers’ Federation and Business Strategies Limited.
Output growth is forecast to slow sharply to 0.5%, while exports will slow and imports will rise sharply, drawn in by the strength of the pound.
These trends will be aggravated by weakening domestic demand as the UK economy slows. This picture looks set to continue well into 1999.
Employment in engineering is estimated to have risen by a little over half a percent in 1997, but a marked slowdown in the rate of growth of output this year will bring a reduction in jobs.
The EEF/BSL survey shows that only the motor vehicle and electronics sectors are expected to increase output. Falling production is expected for metal products, mechanical equipment and electrical equipment sectors.