RTTNews - UK manufacturers expect the difficult trading conditions to ease later this year and forecast the sector to return to growth in 2010, results of the latest survey from the manufacturers' organization EEF showed Sunday.

The survey, conducted during April 29 to May 20 participating 678 manufacturing companies, revealed that the effects of the recession appear to be stabilizing in some sectors as de-stocking nears an end. However, the timing of a return to growth remains uncertain, the EEF said.

Output remained depressed in the second quarter following a similar condition in the first quarter. The output balance for the second quarter fell to minus 52% from minus 39% in the first quarter. Meanwhile, the new orders balance stabilized. Both output and order balances remained in negative territory for the third consecutive quarter.

EEF Head of Economic Policy, Lee Hopley said, The weakness in world markets has hit the sector hard, but it looks like manufacturers are now close to the bottom of the cycle. Nevertheless companies will be navigating through the current economic storm in the months to come.

For the next three months, the EEF said almost all sectors are less pessimistic about output and orders from both domestic and overseas customers. A balance of 13% of companies expects further output cuts next quarter, compared with 41% in the first quarter.

The EEF forecasts manufacturing output to decline 11% in 2009 and a recovery by growing 0.4% in 2010. At the same time, engineering output is forecast to decline 17.5% this year and 0.8% next year.

While companies are preparing for the upturn, government and the Bank of England need to ensure they can access the support they need from banks and credit insurers, Hopley said.

The EEF also expects manufacturers to expel around 188,000 employees this year, more than 40,000 above what it had predicted in its previous survey.

For comments and feedback: contact editorial@rttnews.com