Output and orders remain robust for manufacturers

Manufacturing continues to weaken amidst Brexit uncertainty
Credit: Shutterstock.com/ Andrey Armyagov

Manufacturing output growth experienced a slight slowdown in the three months to august but remained well above the long-term average.

This is according to CBI’s latest Industrial Trends survey, which polled 379 manufacturers.

Output growth remained broad-based, with 13 out of 17 sub-sectors reporting growth, driven by the ‘food, drink and tobacco’ sector.

Manufacturers expect output growth to continue at a similarly firm pace over the next three months.

While total order books faded slightly compared with the previous month, they were still comfortably above the long-run average.

Export orders remained strong and well above the long run average.

Meanwhile, expectations for output price inflation remained steady, and broadly similar to those seen over the past six months.

While we expect UK manufacturers to continue benefitting from healthy external demand and a lower sterling exchange rate, overall economic growth is expected to remain subdued, reflecting weak household income growth and investment being held back by ongoing Brexit uncertainty.

“Manufacturing growth remains strong, supported by the lower level of sterling and strong global economy,” said Anna Leach, CBI Head of Economic Intelligence.

“But risks to that growth remain high in light of international trade tensions and the uncertainty caused by Brexit.

“Firms will be keen to see urgent progress on the Withdrawal Agreement to lock in transition, which is crucial to continuing frictionless trade as the UK leaves the EU.

“Make no mistake, a ‘no deal’ scenario would be immensely damaging not just for UK manufacturers, but also the rest of the EU.

“So both sets of negotiators need to demonstrate flexibility and compromise to protect trade flows worth 600 billion euros each year, particularly against the backdrop of increasing protectionist rhetoric.”