UK manufacturers are expecting business activity to rise over the coming year making them the most optimistic group across Europe, according to KPMGs Global Business Outlook Survey*. The latest figures, compiled by Markit Economics, reflected confidence in expected performance over the next 12 months.
Gautam Dalal, Head of Diversified Industrials, KPMG in the UK, comments:
The confident numbers posted by UK manufacturers come as currency issues mean that the rebound here will be sharper than that experienced in the euro-zone. I believe this signals a 12-18 month window of opportunity for UK manufacturers to steal a march on their continental competitors.
The UK manufacturing findings showed that:
Manufacturing capacity utilisation is expected to grow robustly with the expected rate of change broadly in line with that forecasted in the July Business Outlook Survey.
Manufacturers said that capital expenditure and research and development were both forecast to rise for the first time since the start of 2008. UK employment projections are better than most as they expect them to rise modestly in the coming year compared to most European countries which expect their employment levels to fall.
Input and output prices are set to rise; while costs are set to grow faster than charges in manufacturing. Correspondingly profits are set to grow slower than revenues.
As the UK companies look to capitalise by increasing their own capacity utilisation, it will be interesting to see whether elements of their supply chains are brought back from overseas locations. This is a crucial time insofar as decisions may soon be made about whether to come back all the way to the UK or only as far as the euro-zone. The extent to which regional development aid is made available to facilitate this move may go a long way to determining what that final location is, concluded Gautam Dalal.
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