Manufacturing faltering amid worldwide economic uncertainty, CBI says

Output is solid but order books are below normal standards, a survey by the CBI finds

Manufacturing
Manufacturing

Factory export order books have weakened to their worst level since January 2013 amid political uncertainty at home and abroad, the CBI has said.

Its latest industrial trends survey of 488 manufacturers between August 20 and September 10 found that output remained solid in the last quarter and should strengthen further in the coming three months.

But firms saw total order books fall below “normal” levels, with the impact on exporters particularly severe.

Economists said sterling’s strength and the eurozone’s continued economic stagnation were other factors, alongside the uncertainty caused by the Scottish referendum and the crisis in Ukraine.

CBI deputy director general Katja Hall said: “Against a backdrop of acute political uncertainty at home and abroad, exports orders for UK manufacturers are faltering, which is disappointing.

“However, it’s encouraging that output growth has remained solid and firms expect production to rise strongly in the next quarter.”

The survey found that 34% of firms saw the volume of output rise in the last three months, while 19% said it fell, giving a balance of plus 15%.

It added that 14% of firms said their export order books were above normal and 38% said they were below normal, giving a balance of minus 24%, against a long-run average of minus 20%.

Maeve Johnston, UK economist at consultancy Capital Economics, said: “The survey provides further evidence that sterling’s strength and the eurozone’s fragile economic recovery are proving increasingly tough obstacles for the export sensitive manufacturing sector to overcome.”

But she added that a sustained recovery in domestic demand and slightly stronger growth in the eurozone next year should ensure that the manufacturing sector’s recovery remained fairly robust on the whole.

Fears over the slowing pace of Britain’s manufacturing sector were raised earlier this month after figures from the Office for National Statistics (ONS) showed growth of 0.3% for the second month in a row.

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