Manufacturers are more optimistic about their prospects for the next six months than other industries, despite tightening profits, according to the latest research from Santander Corporate Banking.
The group’s national survey revealed that three times the number of companies suffered profit falls in the past six months as those that experienced a rise, with 59 per cent reporting declines compared with 20 per cent recording increased profits.
Overall, the average national fall in manufacturing profits was 15.5 per cent, while the average rise was 15.4 per cent. This compares to an average profit fall in the past six months of 16 per cent, compared with the average rise of 13.7 per cent.
The construction/building services sector appears to have been the worst affected by the downturn, with 70 per cent suffering a drop in profits in the second half of 2009. Companies supplying the government/public sector saw the biggest average increase in profits at 19 per cent, with the health/medical sector recording average profit rises of 17.6 per cent.
Despite poor profits in the manufacturing sectors, around 78 per cent of manufacturing-company owners are confident about the prospects of their own businesses for the first half of 2010, compared to 73 per cent who were optimistic when the research was first conducted in September 2009.
Nine per cent of companies claim they are ‘very confident’, while 69 per cent are confident about the future, with 22 per cent ‘not very confident’ and two per cent ‘not at all confident’.
Steve Pateman, head of Santander Corporate Banking, said: ‘Confidence is growing in the manufacturing sector as the economy recovers and it is encouraging to see increased optimism. The official end of the recession marks a turning point, but sustained recovery and growth will be challenging, requiring support from the banking industry.’