West Midland manufacturers are shrugging off tough markets and growing healthily, according to a study to be published today .
The latest business trends survey by the Engineering Employers' Federation and business advisers Grant Thornton shows that the credit crunch has so far had only a limited impact on the sector.
Only 2.4 per cent of companies who responded said they had seen a significant increase in the cost of finance from banks or other financial providers. Almost 40 per cent said there had been no change.
The relatively benign nature of the environment in which manufacturers current operate was underlined by another increase in the number of companies planning to invest.
At the beginning of the year fewer than one in four businesses were planning capital expenditure; that has now risen to one in three.
And the number of companies taking on new employees rose for the third quarter in a row - a trend that the report calls "extremely encouraging for the region".
Total orders and output balances were both positive for the seventh consecutive quarter. However, the number of companies reporting a fall in domestic orders increased for the first time this year. Looking ahead, there appears to be uncertainty among manufacturers about the state of the economy in 2008.
Companies are predicting the number of new orders in the domestic market will fall to its lowest level for almost two years. They are further predicting falls in the number of new export orders which indicates the weaker dollar may be beginning to take its toll.
Ian Smith, chief executive of EEF West Midlands, said: "Despite rising oil prices, a falling dollar and a more uncertain economic outlook, manufacturers recorded another quarter of healthy growth. Investment intentions remain strong reflecting the commitment to drive up productivity, and companies are continuing to increase employment.
"Though the economic outlook remains unclear the greater resilience of manufacturers in the last year should mean that growth continues in to 2008."
Across the UK, the EFF/Grant Thornton survey predicts that engineering will expand by 1.3 per cent this year and by one per cent in 2008, while manufacturing is expected to expand by 0.8 per cent this year and in 2008.