EEF Survey - Manufacturers taking
action in face of China slowdown
increasing their vigilance in key markets in light of growing risks and
uncertainty in the global economy, according to a new survey of almost 300
companies published this week, by EEF, the manufacturers' organisation.
As a consequence of the stock market turbulence in China, the shadow of crisis
talks in the 'Euro Zone' and the potential for further trade
restrictions with Russia, economic forecasters aren't the only ones reviewing
their outlook for the months ahead....
► 47% of companies are concerned about the possible sharp slowdown in China of
which 10% are reviewing their business plans.
► 37% of companies are monitoring events more closely.
► The most directly exposed manufacturing sectors to Chinese demand are road
vehicles (16% of exports to China), metal working machinery (8%) and leather
► Companies in the mechanical equipment and metal products sectors are most
likely to be incorporating a weaker Chinese growth profile into their business
plans (17% and 13% respectively).
► The level of concern about a China slowdown is affected by company size. The
smallest companies (turnover of less than £5m) least likely to be worried and
those at the other end of the size spectrum (£50m turnover +) most likely to be
looking at business plan scenarios.
► Fears about Greece leaving the 'Euro Zone' linger, with
only 22% of manufacturers saying they are unconcerned about a re-escalation of
the crisis in Greece.
► In comparison to events in China and the 'Euro Zone' , there is
less concern about the possibility of an extension or enlargement of the EU's
sanctions on Russia; with 30% of manufacturers report concern along with
building into business plan or closer monitoring.
Commenting, EEF Chief Economist Ms Lee Hopley said:- "For some sectors in
manufacturing the slowdown in China isn't a new story as we've seen exports of
vehicles to China on the slide since the end of last year. Overall, UK factories
send only a small proportion of their goods to Chinese customers, but a sharper
slowdown would also see a halt to growth in export sales through supply chains
in Europe. The more widespread impact, at least in the near term, is likely to
be the knock to already delicate confidence levels. The stock market turbulence
made in China raises more questions about the policy reaction there and in other
major markets, giving businesses more uncertainties to navigate. Manufacturers
are certainly keeping a closer eye on developments, with some already taking
action in their business planning to mitigate risks. Time will tell whether this
takes a further toll on growth across the sector."
*** Survey period – 5 Aug to 26 Aug. 284 responses.