JobJustice: Is export industry growth a false dawn?

The Office for National Statistics has published new numbers indicating that the manufacturing sector grew slightly in September. However, the overall index of production, which includes mining, oil and gas industries, remains flat. As such, concern remains over the stability of the UK’s production industry.

The ONS numbers showed that manufacturing output increased by 0.2% between August and September. This compares to the previous month, when a 0.3% decline was recorded, and is the first modest growth that the sector has experienced since May.

Positive industry developments have been long awaited as it previously played a central role in the recovery of the UK’s financial state of affairs. Concomitantly with the recession, the pound fell in value. This currency fall was positive for the export industry, as it meant that British goods were cheap to buy for many countries. Hence, British companies could sell their goods and maintain their workforce, which strengthened employees’ feeling of security.

In light of this, the government, in trying to get the economy back on track, is focusing heavily on boosting UK exports.

The British Chambers of Commerce (BCC) optimistically received the new numbers. Its Chief Economist, David Kern, said: "Seeing the sector remain in positive territory despite difficulties in the eurozone and tough austerity measures in the UK is reassuring.

"Although pessimism about the health of manufacturing is unnecessary, the sector does face difficult challenges and we must reinforce the modest recovery that we are seeing."

However, Chris Williamson, chief economist at the financial information services company Markit, doubted that the numbers indicated a turn in the financial climate.

"This is a disappointing rate of growth for a sector that was hoped to lead the UK's economic recovery, and growth looks set to weaken further in the final quarter of the year." Furthermore, Williamson said that the slow economic growth meant that there remained "a clear risk" of the sector going back into recession, unless it experienced significant growth in the near future.

However, any considerable growth seems to be far off in light of recent industry surveys. These have indicated that the sector is struggling significantly, and that it has experienced a drastic fall in orders.

This is inconsistent with the ONS numbers. Effectively, the findings of the industry surveys point to a deterioration in the sector’s performance. This can be due to the fact that manufacturing has been seriously affected by the decrease in consumer spending and the eurozone debt crisis.

Williamson said that any numbers must be interpreted in the context of the global financial climate. "While there are signs that UK producers are raising their productivity, facing up to the need to adapt and compete aggressively in today's markets, the simple truth is that the current weakness of economic growth at home and abroad means that producers face a challenging time ahead."

This challenging time is likely to make many workers concerned about the security of their jobs. Seeing that Britain relies heavily on Europe as a trading partner, many UK jobs are dependent on the eurozone crisis being solved.

JobJustice

Friday 11 November 2011

Is export industry growth a false dawn?

No comments:

Post a Comment