The effect of sterling’s strength on exports and investments will mean a less rapid growth in manufacturing than previously expected, says Oxford Economic Forecasting. In its UK Industrial Prospects report it says an expected rise in output of 2.25% will lag behind the rest of the economy this year. Chemicals and mechanical engineering are expected to be hit hardest, while electrical engineering and transport equipment should benefit from inward investment.
Latest official figures put engineering industry turnover in the three months to December 1996 at £7.5bn, down 1.1% on the same period a year ago. Turnover in machinery and equipment was £2.7bn, with electrical and optical equipment at £4.8bn.
Almost all pay deals were between 2% and 4% for the three months to January, averaging 3.11%. Average settlements are moving closer to the inflation rate, says the Engineering Employers Federation. Of 200 deals reported in January only 16 firms had pay freezes.
Steel production levels are rising in the EU, says the International Iron and Steel Institute. UK production was up 14.8% in January compared with the same period in 1996, Germany’s up 12% and France’s 10.4%.