West Midlands manufacturers are continuing to help drive the UK’s economic recovery by taking advantage of export led demand, according to the 2011 ‘Manufacturing Outlook’ survey published by EEF, the manufacturers’ organisation and BDO LLP.  

Positive responses on output and orders have continued over the past three months, marking six consecutive quarters of growth. In the last three months the balances on new orders and output were +31% and +29% respectively. 

While the prospects for the next three months have eased with the balances falling to +23% and +15% this is still above the long term average and is to be expected after such a period of strong growth.

As we well as overseas demand growth is being driven by balance by the other transport sector (primarily aerospace) which had a balance of +63%.

While motor vehicles had a weaker quarter, with several shutdowns in the sector, a balance of +27% of companies reported increased output, and orders balances were particularly strong for the next quarter.

This positive picture is being translated into better job prospects for manufacturing companies in the West Midlands, with recruitment intentions for the next quarter almost doubling from +14% in the last quarter to +27% in the next.

EEF analysis also shows that over the last six months nationally, when the economy as a whole stagnated, manufacturing grew by 2.3%.

Since the recovery began, despite only accounting for around 13% of the economy, manufacturing has been responsible for one third of economic growth. Even in the first quarter of 2011, where the industry’s growth rate slowed a little, manufacturing accounted for approximately one quarter of total economic growth.

EEF stressed however that while the overall picture continues to be one of ongoing recovery, significant increases in raw material and energy costs are beginning to impact on manufacturers’ profits and ability pass price rises on to customers.

Richard Halstead, EEF Midlands Region Director, said: “Recent data appear to indicate that manufacturing may be heading for more turbulent times. 

"However, cutting through some of the noise from temporary factors over the past few months our survey continues to show underlying strength in output and orders.  Providing buoyant demand from overseas markets holds firm, we should see growth maintained through the rest of the year.  

“However, the flipside of strong global demand has been upward pressure on a range of input and commodity prices, which has become tougher to manage.  

"But manufacturers’ plans to invest for future growth suggest there is some confidence that they will be able to navigate this and other challenges in the months ahead.”

Tom Lawton, Head of Manufacturing at BDO LLP, said: “On the back of healthy output and order books, the intention to recruit amongst manufacturers has remained strong, with official data showing record levels of vacancies.

"However, the key issue is whether companies are able to meet their intentions and fill their vacancies with the highly skilled workers they require.

“What we are witnessing among our client base is the willingness to recruit - but it’s often very difficult for employers to find people with the adequate skills set to fit the role. We are faced with a short term problem that can only be overcome by long-term solutions.

"To ensure the UK retains its competitive edge, the Government must do more to emphasise education in engineering and manufacturing to guarantee its future workforce has the appropriate skills to deliver the sector’s needs.”

EEF’s forecasts for manufacturing growth, at 3.2% this year, are down slightly from the previous quarter though the sector is still expected to outgrow the rest of the economy in 2011 and 2012.