22,000 jobs could go in manufacturing, survey warns

Weakening international demand could mean that up to 22,000 jobs will be lost in the manufacturing sector this quarter, according to a survey published today.

The CBI/Experian regional trends survey found that manufacturers throughout the UK were being hit by subdued growth, but the depressed export market has most seriously effected business in Northern Ireland, the West Midlands and the Northeast.

On the back of the survey results, the CBI has said that it is critical that neither interest rates nor business taxes rise if the sector is to get back on its feet.

The West Midlands was the worst-hit region where business and export confidence deteriorated while expectations for output were the most depressed in Britain. Firms said orders are on a steady downward path and unit costs are rising faster than any other region.

Despite this, most regions posted increases in output in contrast to the decline seen in official figures. Wales, the Southwest and Yorkshire and Humber have experienced six months of rising employment, while Scotland has seen stability followed by a mild upturn.

Yorkshire and Humber saw the strongest upturn in output with a third successive quarter of expansion. More modest growth was seen in five other regions, led by the East Midlands, Scotland and the Southeast and London, the study found.

Peter Gutmann of Experian said: “International demand has been less supportive to manufacturing than might have been expected, given that the global economy continues to expand at a healthy pace and that sterling has eased in recent months. The muted picture reflects the fact that export orders have been very disappointing."

Doug Godden, CBI Head of Economic Analysis, said: "The impact of rising costs on profitability is a major issue for the second survey in succession. We know from the national results that energy-intensive and metal-related industries are being hit hardest.

"The regional pattern reflects this, with the West Midlands and northern regions of England seeing the sharpest cost increases. It is critical that the Bank of England and the Treasury take note. Now is not the time for further increases in interest rates or rises in business taxation."

(gmcg/sp)