Monthly Monitor Business Report

Business came back strongly in September after summer weakness


Q3 access to finance improvement sustained, UK orders flat, export orders down


Business came back strongly for the mechanical engineering sector in September according to the Engineering and Machinery Alliance’s (EAMA) Business Monitor.


Martin Walder, EAMA chairman: “As a result, Q3 UK and export enquiry and order levels held up well enough to bear comparison with 2013, when there were expectations, subsequently unfulfilled, that the recovery was going to bed itself in.


“The Monitor also asks companies whether access to finance, for working and for investment capital, is easier, more difficult or about the same as last month.  Since the beginning of the year it’s been showing a modest but improving trend with small positive average balances each quarter.  This was again confirmed in September with small but definite positive balances for both working and investment finance.”


In the first half of the year sector order levels held up better for UK business than for exports with average balances halving from Q1 to Q2 for UK from +27 to +13 and for exports from +15 to +8.


“Many observers worried that Q3 might bring signs of further weakening beyond the normal summer hiatus.  This wasn’t the case.


“Nonetheless, behind these trends we can see weaker export numbers emerging compared with a year ago.  Mechanical engineering sector overseas sales were down as much as 7% in the first two quarters on 2013 (£13.6 billion compared with £14.6 billion a year earlier).


“In large measure this is due to the economic difficulties customers are facing in the EU on the one hand and the slow-down in industrialising countries previously enjoying rapid growth.  To this must now be added the strength of Sterling trading over $1.60 and €1.25.


“However, after a dip in August, confidence has picked right up again.  It’s as if the sector has faced it all before and knows what it has to do to succeed.


“As a result the job scene is still strong with a third of companies expecting to take on new people now and over the next three months and nearly two in five firms report investing across all areas of their business.”


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