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A recovery in the UK manufacturing sector is likely to take some time to gain footing, due to continued uncertainty regarding the strength of the markets, and tighter credit conditions weighing on recovery prospects into the next year, a report by the manufacturers' organization EEF and BDO Stoy Hayward said Monday.
Manufacturers are not expecting a quick turnaround in the sector's fortunes, even as the third quarter data showed conditions in the sector stabilized in recent months, with the pace of decline moderating in recent months after 12 months of steep falls in output and orders.
The organization was particularly concerned about investments, as it said companies would need to invest for their upstart. "Previous evidence suggests that investment intentions continue to be delayed for some time after the first green shoots appear," it said.
The EEF said there was little sign of confidence coming back, with production levels well below pre-recession levels and the road likely to be long and bumpy. Moreover, tight cashflow and access to finance were the other major constraints. The industry body said the government had a role to play to ensure that these problems do not prevent companies from making investments needed to take advantage of recovery when it comes.
Meanwhile, the organization said looking forward firms expect an improvement in demand in the fourth quarter and in 2010. However, output is likely to contract 10.5% this year, but grow modestly by 0.5% next year.
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