Industry's growth spurt offers hope for job creation

Manufacturing is growing at the fastest rate since 1994, with firms poised to create jobs as cuts are made in the public sector, according to a report published today.

The Engineering Employers' Federation said a survey of 300 companies showed that most planned to invest in their business, with innovative ideas for growth.

Despite its sharp decline since the eighties, the EEF insisted the manufacturing sector had the potential to create jobs and "re-balance" the UK economy.

Terry Scuoler, chief executive of the trade body, said: "Manufacturing is well-placed to fill the growth gap as the public sector plays a smaller role in our economy and make the investments in innovation and skills that will drive our economy and create jobs.

"But this will only happen if there is a genuine partnership with government that helps companies of all sizes and growth stages to overcome the barriers that they currently face."

He added: "Whilst the current attention on young businesses and start-ups is helpful, we must not ignore the wider benefits to the economy that larger companies bring.

"The UK doesn't just need a handful of larger companies over the next decade, we need hundreds of them with the scale and muscle to tackle our economic challenges.

"Otherwise, we risk placing a speed limit on our growth potential."

Peter Russell, from the Royal Bank of Scotland, which helped with the research, added: "Manufacturing continues to make a significant contribution to the UK economy and is well-placed to play an even greater role in a sustained economic recovery."

Figures released last week by the CBI showed that manufacturers are poised to pass on higher costs to consumers, stoking fears that inflation may be spiralling out of control.

While demand for UK-made goods has shown signs of recovery in recent weeks, the industrial trends survey warned that more companies will be forced to pass on some or all of their rising costs in the coming months.

The CBI said demand for goods has strengthened in November, following a dip in October, and had now returned to the levels seen over the summer.

Oil and fuel costs remain a core source of inflationary pressure.

Between the CBI's October and November reports, the average price of a barrel of crude rose by almost $5 to just under $86.