The Use of Engineering Orders for Forecasting

The importance of the engineering industry to the United Kingdom economy is attested both by its absolute size (excluding vehicles, its weight in the industrial production index is currently 232 in 1,000) and by its contribution to visible exports (nearly 27 per cent by value in 1969). When it is also considered that engineering products make up a large part of manufacturers' investment in plant and machinery, and that the industry produces to order, it is apparent that an examination of this industry might yield some useful information for the Institute's forecasting work. In particular, the published figures of engineering orders on hand and net new orders and deliveries for both the home and export markets contain information relevant to forecasts for investment and exports. The difficulties of obtaining usable and reliable behavioural relationships for these two variables are well known—in the first case because of the importance of unquantifiabll ‘confidence’ considerations and in the latter because of the need to forecast economic factors and conditions in a large number of overseas markets.