The latest Business Trends report from BDO shows that business confidence is plummeting as growth in the manufacturing sector seems to have stagnated.
Businesses in the UK are now expecting to see very little economic growth in the coming six months.
The manufacturing output index, used to gauge advanced growth in the sector, has dropped to 93.9. This is below the benchmark level of 95 and therefore indicates the industry is contracting. It’s also the lowest recording since the economy started to emerge from the recession in October 2009.
The manufacturing optimism index has been below 95 for the last two months, suggesting the manufacturing sector will remain in a recessionary state into the beginning of next year.
The service sector is not faring much better. Although its index has not dropped below the 95 mark, it has been hovering just above for more than a year, indicating zero growth for the remainder of 2011.
Peter Hemington, one of the partners at BDO LLP, said the economic recovery is still faltering and declines in the manufacturing sector are alarming. Furthermore, the service sector is not showing any sign of being able to pick up the slack.
Although the overall picture seems to be one of doom and gloom, businesses in Scotland seem to be doing reasonably OK if the most recent Bank of Scotland Report on Jobs is anything to go by. Demand for both permanent and temporary workers north of the border increased strongly in July.
Bank of Scotland chief economist, Donald MacRae, said the number of permanent placements had been increasing continually over the past ten months, and last month the rate of vacancy growth rose to a three-month high.
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Image: Factory by Ben Husmann
