Belfast Telegraph

Manufacturers report slowdown in order growth

By Ravender Sembhy

UK manufacturers registered a slowdown in order growth in August, but the sector continues to be boosted by the weak pound.

Weekly Business Digest Newsletter

This week's business news headlines, directly to your inbox every Tuesday.

The latest Industrial Trends Survey from the Confederation of British Industry (CBI) showed 13 out of 17 sub-sectors reporting growth, driven by the food, drink and tobacco sector.

But output growth "eased somewhat" - with the factory order book balance falling to +7% from +11 - although the CBI said it is still comfortably above the long-run average.

CBI head of economic intelligence Anna Leach said: "Manufacturing growth remains strong, supported by the lower level of sterling and strong global economy. 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."

The pound's collapse following the June 2016 referendum has made British exports cheaper for foreign buyers.

But without a trade deal with the EU, British manufacturers will be subject to tariffs and other restrictions as the UK would sit outside the bloc's single market.

"Make no mistake, a 'no deal' scenario would be immensely damaging not just for UK manufacturers, but also the rest of the EU," Ms Leach added.

"So both sets of negotiators need to demonstrate flexibility and compromise to protect trade flows worth €600bn each year, particularly against the backdrop of increasing protectionist rhetoric."

The CBI data showed 31% of manufacturers reported total order books to be above normal, and 23% said they were below normal, giving a rounded balance of +7% for three months ended August.

According to the CBI survey, a net 21% of respondents said output volume increased in three months to August.

Manufacturers expect output growth to continue at a similar pace over the coming quarter.

Belfast Telegraph