Link, share, join, listen ...
Link, share, join, listen ...
I think it is fair to say that all the interim managers specialising in the manufacturing and engineering sectors were painfully aware that the Prime Minister’s optimistic view that the economy was returning to growth in Q3 was nonsense – to be fair, even the City analysts got it wrong with the fall in industrial output of 2.5% far greater than their forecasts of a 0.2% rise.
Equally, I sense that we will return to positive territory in Q4 (if only just), based on the amount of increased activity Interim Partners has seen across the Private Sector, in particular since late October.
Recruitment bears a close correlation to economic conditions, and the surge in enquiries and a number of placements across all sectors suggests we are finally beginning to see those green roots become established. Our interim managers have also sensed an upturn in activity with more potential opportunities in the offing, even if they are still slow to convert.
Clients are also in the main, more confident now than they have been for the last 12 months – they caution that we’re not out of the woods yet, that the recovery is fragile, but they also add that numbers are recovering and the initial panic is over.
So what can we expect next year? I would be interested if you would share your thoughts with me. Key factors to my mind are as follows:
Commodity Prices: Oil in a word. Soaring oil prices will inhibit prospective growth
and were a major factor in tipping manufacturing further into the red. With prices
hovering at the $80 barrel mark there’s a danger that growth is already stalling, and
pump price increases are already hitting consumers where it hurts.
Quantitative Easing: At some point this has to stop. It’s going to be a tremendous
challenge to a new Government to manage the process without harming credit
streams, and to continue pushing taxpayer majority owned banks to meet Whitehall
imposed lending targets.
Tax rises: At some point these will have to rise to pay off the above, and again,
consumers will have less to spend.
The Dubai Effect: This barely caused a ripple in London, but raises the spectre of
ghosts past. Default on a larger scale would cause London and the credit markets to
implode.
Which ever angle you look from, it seems next year will be steady – yes, fears over the UK economy and national debt is devaluing Sterling, good for exports; yes, consumer confidence is much stronger, reflected in house price increases; and yes, the bankers are receiving huge bonuses again – always the sign of the good times… right?!
However, there’s no escaping that in manufacturing and engineering it’s a tentative recovery. I can’t see strong economic growth occurring for quite some time to come, and I expect next year to be a repetition of the stop:start growth pattern experienced over the last 5 months. But I don’t see those green shoots wilting
Tom Legard is a Senior Consultant in the Manufacturing Practice of Interim Partners.
