From the TUC

Manufacturing to the rescue?

28 Jan 2011, by in Economics

With GDP growth grinding to a halt and consumer confidence tumbling, one of the few crumbs of comfort for the UK economy is the outstanding performance of the manufacturing sector.  

Both the CBI’s industrial trends survey and the Purchasing Managers Index show a sector in rude health at the end of 2010, with output up and domestic and export orders on the increase.  And with growth of 1.4% it was the one bright spot amid the alarming GDP figures for the last quarter.

The stakes have been raised significantly for manufacturing as the sector is seen as key to the ‘rebalancing’ of the economy, the export-led growth and the stimulation of private sector employment that lie at the heart of the Coalition Government’s economic policy.  Essentially, this is George Osborne’s big gamble.

But can manufacturing bring jobs back where they’re needed? 

As Richard Exell pointed out last week on this site, the CBI’s industrial trends survey suggests promising jobs growth in the sector, with a plus 8% result for ‘numbers employed’ over the past 3 months and +2% for the next three.

However, the picture remains uncertain.  Figures from the ONS suggest that total employment in UK manufacturing has declined by 90,000 between the third quarter of 2009 and the third quarter of 2010, as the table below shows.

UK Manufacturing Employment  (Office for National Statistics)
Period Employment
Q3 2009 2398
Q4 2009 2392
Q1 2010 2336
Q2 2010 2323
Q3 2010 2308

 

There may be several reasons to account for anomaly between the CBI’s survey and ONS data.  This may reflect differences between employers covered by the Labour Force Survey and the CBI’s own survey.  It may also reflect differences in the time lag between the hiring of new labour and its reflection in the statistics.

However, a significant fall in the manufacturing workforce over a period when the sector was recording growth of over 5% does raise worries about the prospects of a jobless recovery.

Manufacturing growth has been positive but it is worth remembering that this represents a bounce back from a recession where job hoarding and flexible employment practices were prevalent in the sector.  Growth may therefore more likely translate into an increase in hours and productivity rather than new jobs.

And it’s also worth bearing in mind what manufacturing looks like these days.  A sector characterized by small and medium sized lean operations is not going to be a huge employer.  Its traditional multiplying effect in related service industries may well deliver jobs growth but this hasn’t figured massively either.

It remains to be seen if we can harness manufacturing success in the drive for jobs, the jury remains out for now.  But it will be worth keeping a sharp eye on employment figures for the sector over the next six months to see what chance there might be.

One Response to Manufacturing to the rescue?

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    Jan 28th 2011, 11:47 am

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