Skills shortages could slow down growth in the manufacturing sector

Growth in the manufacturing sector across the South East could be held back by skills shortages, data published in the BDO’s latest “Employment Index” has suggested.

Manufacturers hiring intentions for the third quarter are heading for record highs, the index jumping to 107.7 in May from 105.6 in April. This is just below the previous peak in the survey’s 22-year history, a reading of 108.9 recorded in February 2007. It indicated companies plan to continue bolstering workforces above the long-term average rate over the next three months, BDO said.

Additionally, the BDO’s ‘Manufacturing Optimism sub-Index’, which looks at manufacturers’ growth expectations over the next six months, rose to 121 in May, well above the 100 mark which reflects long-run average growth.

David Eagle, partner at BDO in the South East, said: "Businesses are translating their confidence in economic recovery into action, demonstrated by the sustained increase in hiring expectations.

"But a gap between supply and demand for skilled workers is developing, which could take the momentum out of the recovery."

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