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A majority of firms (a weighted 81 percent) in the manufacturing sector expects the business situation in the next six months to remain similar to a quarter ago. A weighted nine percent of manufacturers expects business conditions to improve while a weighted 10 percent foresees a softer business outlook. Overall, a net weighted balance of one percent of manufacturers anticipates a less favourable business situation for the period October 2018 – March 2019, compared to the third quarter of 2018.
Within the manufacturing sector, the transport engineering cluster is the most optimistic about business conditions, with a net weighted balance of 21 percent of firms expecting improvement, compared to a quarter ago. In the marine & offshore engineering segment, the oil & gas field equipment manufacturers anticipate more orders on the back of firmer oil prices. The shipyards foresee more ship repairing work while offshore rig orders remain subdued. Additionally, in the aerospace segment, firms continue to expect strong demand for aircraft engine repair in the next six months.
In the biomedical manufacturing cluster, a net weighted balance of six percent of firms foresee a favourable operating environment in the next six months. This positive sentiment is largely due to the medical technology segment which expects export orders to remain strong.
The rest of the manufacturing clusters are less optimistic about business prospects compared to a quarter ago. In particular, the machinery & systems segment in the precision engineering cluster and the infocomms & consumer electronics segment in the electronic cluster anticipate weaker orders, given growing concerns over the global trade tensions.
Output Forecast for October – December 2018
Compared to the third quarter of 2018, a net weighted balance of two percent of manufacturers expects output to increase in the fourth quarter of 2018.
The biomedical manufacturing cluster is the most optimistic, with a net weighted balance of 27 per cent of firms projecting a higher level of production in the fourth quarter of 2018, compared to a quarter ago. The medical technology segment projects increased output to meet export demand for medical devices. In addition, the pharmaceuticals segment forecasts higher production of active pharmaceutical ingredients and biologics in the next three months.
A net weighted balance of 19 per cent of firms in the transport engineering cluster expects a higher level of activity in the next three months. The aerospace segment anticipates more aircraft engine repairs while the marine & offshore engineering segment foresees more ship repairing work.
A net weighted balance of 12 percent of firms in the general manufacturing industries cluster projects increased output in the fourth quarter of 2018, compared to previous quarter. Within the cluster, the food, beverages & tobacco segment anticipates higher production due in part to the year-end festive demand. In addition, the miscellaneous industries segment expects higher output of batteries as export demand from Europe and the US remains strong.
By contrast, the precision engineering cluster is the least upbeat, with a net weighted balance of 23 percent of firms projecting a fall in production level in the fourth quarter of 2018. The weaker production outlook is largely due to the machinery and systems segment, which anticipates lower production due to uncertainties in demand amid global trade tensions.
Employment Forecast For October – December 2018
A majority of firms (a weighted 85 percent) in the manufacturing sector expects the employment level in the next three months ending December 2018 to remain similar to a quarter ago. Overall, a net weighted balance of one percent of manufacturers plans to hire fewer workers in the fourth quarter of 2018, compared to the third quarter. Among the manufacturing clusters, the electronics, precision, transport engineering and general manufacturing industries clusters expect to hire fewer workers for the period October – December 2018.
Factors Affecting Export Orders For October – December 2018
A majority of firms (a weighted 70 percent) in the manufacturing sector reported no limiting factors that would affect their ability to obtain export orders in the fourth quarter of 2018. A weighted 25 percent of firms, on the other hand, indicated price competition from overseas competitors, and economic and political conditions abroad as the top two limiting factors that could affect their export orders.
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