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Orders up but sluggish exports hitting manufacturers

By Roger Baird

Published 18/12/2015

Cars, aerospace and transport equipment were the greatest contributors to order books
Cars, aerospace and transport equipment were the greatest contributors to order books

UK factory output hit a three-month high this month, although export orders still remain a drag on growth, a report has said.

The latest CBI Industrial Trends Survey showed the balance of firms that increased their total orders rose to minus seven, an improvement from minus 11 last month and minus 18 in October.

October's reading was the steepest rate of decline since October 2012. Exports remained a drag on manufacturing output, giving a reading of minus 18 this month compared with minus 29 in November, with firms hampered by the strong pound.

But Northern Ireland's manufacturing industry is facing a difficult period, with jobs losses recorded in November, according to the latest purchasing managers index (PMI). The ONS UK-wide report said overall production volumes edged down in December from plus four a month ago, and firms expect output to decline further over the coming three months.

Cars, aerospace and transport equipment were the greatest contributors to order books.

For the second month, firms also expect selling prices to be flat over the coming quarter.

Rain Newton-Smith, director of economics at the CBI, said: "Manufacturers are still having a tough time of it with output slipping and exports remaining a weak spot in spite of an improvement at the end of the year. But there is a pick-up in orders from previous months, which could be a sign of light at the end of the tunnel."

IHS chief UK and European economist Howard Archer said manufacturing output contracted in the third and second quarters of 2015, and latest official data shows that output fell 0.4% month-on-month in October.

He said the CBI survey offers hope that 2016 could be a better year for manufacturers, "even if it will be far from easy".

He added: "Manufacturers do have some positives to cling on to - very low oil and commodity prices increase their ability to price competitively to try and gain business."

Belfast Telegraph

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