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The changing shape of UK manufacturing Filling the gap: the role of business surveys Presentation to ONS Business Statistics User Conference 22 October 2014 Lee Hopley
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Filling the Gap: the role of Business Surveys - Lee Hopley

May 29, 2015

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Page 1: Filling the Gap: the role of Business Surveys - Lee Hopley

The changing shape of UK manufacturing Filling the gap: the role of business surveys

Presentation to ONS Business Statistics User Conference

22 October 2014

Lee Hopley

Page 2: Filling the Gap: the role of Business Surveys - Lee Hopley

Overview

• Current trends in manufacturing – what do business surveys bring?

• Building on what is happening, with why it’s happening

• Future trends – what are the signs?

• Limitations and where we’d like some more, please

Page 3: Filling the Gap: the role of Business Surveys - Lee Hopley

The value of business surveys?

Timing, more detail on size,

sector or region, plugging data

gaps and some thoughts on the

actions that sits behind trends.

Page 4: Filling the Gap: the role of Business Surveys - Lee Hopley

Output and orders edge down, % balance of change in the past three months and % change on a year ago

Source: EEF Business Trends Survey and ONS

Page 5: Filling the Gap: the role of Business Surveys - Lee Hopley

A UK growth story, % balance of change in orders in the past three months

Source: EEF Business Trends Survey

Page 6: Filling the Gap: the role of Business Surveys - Lee Hopley

Employment heads higher too, % balance of change in past three months and % change on a year ago

Source: EEF Business Trends Survey and ONS

Page 7: Filling the Gap: the role of Business Surveys - Lee Hopley

Sector and regional differences apparent, % balance of change in employment in past three months by sector

• Positive employment balances most like in East, E. Mids and SE over the past year.

• Employment increases planned in 2014 more likely to be permanent than temporary.

• Increases expected across all firm sizes.

• Over half of manufacturers surveyed by EEF were planning to recruit for an apprentice in 2013/14.

• And pay deals running at between 2.4-2.6%

Source: EEF Business Trends Survey

Page 8: Filling the Gap: the role of Business Surveys - Lee Hopley

Steady prices, squeezed margins, % balance of change in past three months

-50

-40

-30

-20

-10

0

10

20 %UK margins Export margins

Source: EEF Business Trends Survey

Page 9: Filling the Gap: the role of Business Surveys - Lee Hopley

A lot of companies planning a little investment, % balance of companies planning investment in year ahead and % balance

of change

Source: EEF Business Trends Survey and Executive Survey

Page 10: Filling the Gap: the role of Business Surveys - Lee Hopley

What are the drivers? % of companies citing driver of increased plant & machinery investment

Source: EEF Investment Monitor

Page 11: Filling the Gap: the role of Business Surveys - Lee Hopley

Business Surveys – The not so useful

• Short term expectations: forward-looking survey balances less

reliable indicators of future trends.

• Productivity: a pointless answer – output per hour. Companies’

judgements on productivity not always in synch with official

definitions.

• A complete regional picture: coverage is partial and sector surveys

should be considered in the round.

Page 12: Filling the Gap: the role of Business Surveys - Lee Hopley

Current and future trends

Manufacturing strategies have

been changing and investment

priorities will continue to shift.

Can we measure them?

Page 13: Filling the Gap: the role of Business Surveys - Lee Hopley

Intangible investment – getting more important, % of companies planning increase in investment and % citing increased

importance of intangibles

Source: EEF Investment Monitor

Page 14: Filling the Gap: the role of Business Surveys - Lee Hopley

Manufacturing coming back – who benefits? % of companies bringing production back to UK from low cost economy

• Profitability and turnover benefits, some additional jobs of in-house reshoring.

• Bigger benefits in the supply chain.

• More scope for job creation and higher proportion of companies securing orders from low cost competitors not increase in profits.

• But finding suitable UK-suppliers is limiting reshoring possibilities.

Source: EEF/GFK Make it Britain Survey 2014

Page 15: Filling the Gap: the role of Business Surveys - Lee Hopley

New drivers of activity in UK manufacturing, % of companies reporting as influence on UK operations

Source: EEF Innovation Monitor

Page 16: Filling the Gap: the role of Business Surveys - Lee Hopley

Keeping on top of change

• Understanding how these changes will affect manufacturing and wider economic growth…. A few thoughts:

• International comparisons eg productivity levels as well as growth.

• A wider definition than R&D to capture innovation activity.

• Sectoral employment trends as a further indicator of expansion.

• International locations of activity by UK businesses.

Page 17: Filling the Gap: the role of Business Surveys - Lee Hopley

Questions?