Glimmer of hope for engineering in the UK

There are signs that the recession in the UK engineering sector is almost over and should return to modest growth in the second half of this year. The indication that the worst may be over comes from the latest quarterly survey published by the Engineering Employers Federation (EEF) and RSM Robson Rhodes, which reveals the smallest decline in output and orders for more than two years.

But the EEF warns that any recovery will be tentative and could be blown off course by a further decline in the Euro zone.

"Despite these tentative signs of recovery, we are unlikely to see any sustained growth until world markets show more signs of life," cautions Steve Radley, the EEF`s chief economist.

The survey of more than 1,100 companies shows that:

• engineering is likely to expand by 0.4% this year, while manufacturing will show no growth;

• firms are continuing to cut back on investment and jobs; and that

• the new-found optimism has yet to feed though to improved margins and cashflow, which remain under pressure..