UK manufacturers optimism at lowest point in 12 years

The optimism of the UK’s manufacturers is at its lowest point in 12 years as order books collapse and access to finance remains difficult, according to BDO’s Manufacturing Optimism Index.

Manufacturing optimism levels were at 81.9 in February 2009, down from 82.1 in January 2009 - the lowest point since records began collation in 1997.  The highest optimism level on record is November 1999, with a lofty 103.3.  The index is scaled so that 100 equates to trend annual growth of 2.5 per cent, 110 equates to the late 1980s boom and 90 equates to the trough of the previous economic cycle in 1991.

Tom Lawton, Head of Manufacturing, at BDO, says: “For many months now most manufacturers have seen a consistent fall in new orders and have been either reducing working hours or staffing to try and keep their heads above water.  With order books continuing to diminish, the future looks as if it will bring little respite.”

“The credit crunch started as a financial crisis that has rapidly expanded to the real economy. Manufacturing is being hit hard due to lack of funding, high capital requirements, slashing of investment budgets and consumer spending on durable goods. This has led to a startling de-globalisation of product markets and collapse in world trade – and the spectre of protectionism,” he continues.

The Manufacturing Optimism Index echoes recent Government figures, which have shown that manufacturing output fell for 10 successive months.

“Manufacturers short term actions should be focused on maintaining cash reserves and keeping an updated but robust set of profit and cash flow forecasts.  In addition, cost saving exercises and inventory reduction will go a long way to helping manufacturers through the tough year ahead,” concludes Lawton.

ENDS

For more information, please contact Dee Crooks at BDO on 020 7893 2761 / 07815 172 051 or email dee.crooks@bdo.co.uk

Notes to editors:

BDO LLP operates across the UK with over 3,000 partners and staff. BDO LLP is a UK limited liability partnership and the UK Member Firm of BDO International. BDO international is a world-wide network of public accounting firms, called BDO Member Firms. Each BDO Member Firm is an independent legal entity in its own country. The network is coordinated by BDO Global Coordination B.V., incorporated in The Netherlands, with its statutory seat in Eindhoven (trade register registration number 33205251) and with an office at Boulevard de la Woluwe 60, 1200 Brussels, Belgium, where the International Executive Office is located. In the UK the Belfast Firm is operated by a separate Partnership known as BDO - Belfast.

BDO LLP and BDO - Belfast are both authorised and regulated by the Financial Services Authority to conduct investment business.

BDO LLP and BDO - Belfast are both authorised and regulated by the Financial Services Authority to conduct investment business.

BDO is an award winning firm.  Recent achievements include:

• Best Workplace UK - Financial Times 2008
• 100 Best Companies to Work For - The Sunday Times 2008
• Audit Team of the Year – Accountancy Age Awards 2008
• Tax Team of the Year – Accountancy Age Awards 2008
• Corporate Finance Deal of the Year – Accountancy Age Awards 2008
• Employer of the Year – Accountancy Age Awards 2007
• The Women of Achievement Award –  Women in the City 2008
• Top 50 Where Women Want to Work - The Times 2007
• Business Superbrand - Business Superbrands 2008