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Manufacturing Leads a Strong Start to 2013


North East firms experienced an upsurge in sales and orders at the beginning of 2013 due to growth in manufacturing, according to the region's largest business survey.

NECC Quarterly Economic Survey North East firms experienced an upsurge in sales and orders at the beginning of 2013 due to growth in manufacturing, according to the region's largest business survey.

The first quarter figures show that both have increased since the end of 2012 in both the UK and in exports.

The North East Chamber of Commerce's Quarterly Economic Survey (QES), published today, also shows that manufacturing growth has returned to early 2012 levels after being overtaken by service sector progress in Quarters 3 and 4.

The QES, produced in partnership with Barclays, is a trends survey that shows the health and direction of the North East economy. Measured across 11 separate indicators, any score above zero indicates trading conditions are improving.

The figures reflect optimism seen at the beginning of 2012 as the number of companies increasing staffing levels and planning investment continues into 2013.

Almost all key indicators in the survey are in positive territory, with most improved from the end of last year. While sales and orders have not reached the peak seen in early 2012, manufacturing's strong rebound was expected as demand from emerging economies strengthened and exchange rates became more favourable.

Employment and investment among NECC members continues to strengthen, a welcome sign of business community optimism.

NECC Director of Policy, Ross Smith, said:

"The first half of 2012 saw the biggest rise in business positivity since 2008, but that slowed in the second half of the year as manufacturing growth and export orders impacted slightly on regional optimism.

"However, it is good to see that the first set of QES results this year has brought a renewed positivity with this welcome boost to sales and orders. While I appreciate 2013 will be another tough year the outlook now seems much more positive."

Ross said:

"While our manufacturing performance is a real headline of this QES it is also good to see sustained growth across the service sector after a long period of effective stagnation. Service sector scores are still well into positive territory and it is clear the North East is no longer reliant on one sector alone for its recovery.

"The recovery of investment plans is also maintained, with high scores for the manufacturing sector particularly encouraging. There has only been one quarter where the plant investment score for manufacturers has been higher since the onset of recession in 2008, and that represented a rebound rather than sustained growth.

"However, it must be remembered that any growth is from a low base after four years of muted investment, scores are still some way from the levels seen prior to 2008, there is an element of rebound from weak Q4 figures and the first quarter of 2012 showed a strong set of scores which were not maintained. Nevertheless, this is still an encouraging picture and will be even more so if it extends to Q2.

"Overall the survey shows that pre-recession growth is some way off, though some individual firms are seeing significant success. But confidence continues to creep back and this always a good sign."

The Quarter 1 QES, includes a comparison between Local Enterprise Partnership areas and demonstrates significant gains in both areas.

The indicators demonstrate that businesses in the North of the region have more robust UK sales and orders, while the South is ahead on exports. The South leads on investment and recruitment, while both predict positive profitability and turnover.

Cashflow continues to be an issue across the board.

One company announcing expansion plans is Cramlington firm Potts Print (UK), which delivers carbon balanced lithographic and customised digital print services.

Stephanie Tobin, Finance Director of Potts Print (UK) said:

"It's great that we've been able to implement our long term growth plans with funding from Barclays. The new machinery we've invested in will enable us to keep pace with the strong order book we have while maintaining a high level of flexibility, which is something that we take pride in. This continued expansion should lead to employment opportunities that will benefit the North East, which is essential for sustaining the economic growth of the region."

Chris Rigg, North East Team Director for Barclays, said:

"The survey shows a positive start to the year, with encouraging results for the quarter providing hope for businesses across the North East.

"Results on a range of indicators are picking up after a less buoyant Quarter 4 in 2012 and this broadly mirrors the activity we are seeing at Barclays, which has been more upbeat since the start of the year with greater levels of engagement from businesses in the region.

"Oil and gas remains a sector with plenty of activity, while at the other end of the scale, high street retail is still very challenging. But we are seeing a general uptick across nearly all sectors and it's good to see a strong performance in job creation – which also mirrors some research we recently conducted across the region."

Below is a summary of the QES indicators:

QES Q1 2013 Table