EEF survey warns of slowdown in UK manufacturing sector

According to manufacturing organisation EEF, quarterly balances for new orders and output declined to their lowest level since the third quarter of 2009, when Britain had just emerged from its worst recession in over 70 years.

The manufacturing sector has failed to contribute to growth in the first nine months of 2015 and there are slim hopes for a recovery next year, even though the UK is expected to have the fastest growing economy in the world for the second consecutive year.

“Concerns about world trade growth and the strength of demand from both developed and emerging markets have become more prominent [...] since our last report," said the EEF's chief economist, Lee Hopley.

"Closer to home, the domestic market is also looking considerably less supportive than has been the case in recent years."

The sub-indices tracking plans for investment and employment in the manufacturing sector fell below zero for the first time in five years.

However, a separate survey from the Recruitment and Employment Confederation showed payrolls at British firms continued to grow at a steady pace.

Permanent staff hiring rose at the fastest pace in seven months in November, while starting salaries also rose, albeit at a slightly slower pace than in the previous month.

“November saw a further tightening of labour market conditions, with few sectors remaining immune from the effects of ongoing skills shortages," said Bernard Brown, a partner at accountants KPMG.