AT LAST there is an upturn in the manufacturing sector in Yorkshire, but few are prepared to back the climb back with hard cash.

The good omens are revealed with the publication of the Engineering Employers Federation (EEF) fourth quarter figures for its outlook survey.

The survey suggests that while recovery in the regions remains patchy, Yorkshire is one of the strongest for output and orders, with the third quarter in a row showing improved output.

At the same time, the survey finds a "significant" fall in capital investment.

Andy Wood, a partner with business advisers RSM Robson Rhodes and a member of the firm's national engineering group, which helped to prepare the survey, said: "Historically, companies coming out of recession and into an upturn, increase capital investment. This does not seem to be happening, and those manufacturers. choosing not to reinvest, may be unable to take full advantage of any significant upturn when it comes."

Ian Hughes, chief executive of the Yorkshire and Humberside EEF, said orders were increasing "but the numbers of employed continue to decline and prices and margins remain under severe pressure.

"So unsurprisingly, levels of cashflow and planned capital expenditure have all become more negative despite the good indications. Rising volumes of business and decreasing cashflow is a dangerous combination."

Updated: 13:04 Thursday, December 11, 2003