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EAMA Quarterly Business Monitor

Excellent first quarter for mechanical engineering companies

Confidence positive and realistic given the current general economic environment

The potential signalled at the start of the year carried through in the first quarter with excellent enquiry and order balances, according to the Engineering and Machinery Alliance’s (EAMA) Business Monitor.  While confidence levels continue to run positive they don’t reflect the strength of the business-related numbers.

Martin Walder, EAMA chairman: “The first quarter has been spectacular for some sectors.  For example, the March enquiry and order levels were such that over half the firms reported gains in both areas for UK and for export.  And on enquiries the share of firms recording falls shrank to single digits to produce record results for the Monitor.

“Order level balances were also good, but with between and fifth and a quarter of firms reporting orders down, they weren’t as high as the levels for prospective future business.  Nonetheless it’s been pleasing to see strong prospecting numbers converted into large numbers of firms reporting rises in orders both for UK and for export customers.

“Current confidence levels are positive, but they don’t echo the strengths in the Monitor’s business numbers.  The current exchange rate helps exporters, but by the same token raw material import prices were up 17% in March compared with a year ago.  Sterling weakness cuts both ways.  So, perhaps it’s more accurate to say the current confidence levels reflect a realistic assessment of future opportunities and challenges.

“Looking back over the last three or four years we can see that our members’ confidence levels are significantly higher than in 2015 and the first half of 2016, that it’s back in 2013/14 that confidence ran as positively or slightly higher for a sustained period.

“One of the more recent developments, which we expect will have a positive effect on the general business and economic environment will be the way the next administration gets on with the task of implementing the government’s industrial strategy, with the key aim of raising UK productivity.  This featured prominently in the EAMA response to the green paper, with productivity growth to be differentiated from lean strategies.”

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