U.K. manufacturing output and orders were "buoyant" between July and September on the back of strong overseas demand, according to a new survey, suggesting growth in manufacturing output should at least continue into the next quarter.
The Engineering Employers Federation said output and new order balances were 33% and 35% respectively, both record high levels since the survey began in 1995. The output and new order balances had come in at 30% and 34%, respectively, in the June quarter. The figures are based on a quarterly survey conducted by the EEF and the accountancy services firm BDO LLP.
While the domestic order balance weakened slightly, the external market turned out to be stronger than expected, the EEF said. Demand was particularly strong from Britain's main export market - Europe.
Buoyant conditions in the sector drove up the employment balance to 17%, the strongest in the survey's history. The investment balance also turned positive for the first time in over two years, with the balance coming in at 7%, suggesting firms are becoming more confident to begin investing in plant and machinery.
Manufacturers are also more upbeat over their outlook for the next three months. A balance of 27% of companies expect output to increase in the next three months, and 22% expect orders to expand - both higher than the previous quarter's balances.
The EEF, however, cautioned that there were significant risks to growth despite the short-term optimism, due to an uncertain recovery in the U.S. and the U.K. government's austerity program.
"Manufacturers have continued to reap the rewards of growth in overseas markets with the upswing being felt across all sectors and regions," EEF chief economist Lee Hopley said. "Not only has this continued to translate into better employment prospects but the recovery in investment has begun much earlier in the cycle than after previous recessions."
"However, we have to maintain perspective that the recovery is coming from a very low base and the risks to the economy in the medium term haven't gone away," the economist noted. "The rebound in exports and modest improvement in investment will need to become much more firmly entrenched if we are to see a much-needed rebalancing of the economy."
Last week, a separate survey from Markit Economics and the Chartered Institute of Purchasing and Supply showed that manufacturing slumped to a nine-month low in August, with the rates of production and new orders both slowing. The survey found that U.K. manufacturing employment rose for the fifth straight month during August. Jobs growth was solid, albeit the weakest during that period.
The EEF estimates the U.K. economy will expand by 1.5% and 2.1% in 2010 and 2011 respectively. Manufacturing is forecast to grow by 3.7% in 2010, before easing back slightly to 3.2% in 2011.
The U.K. economy expanded 1.2% between April and June, the fastest quarterly expansion in nine years. But analysts do not expect the pace of growth to be maintained as the government's budget cuts begin to bite.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.