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Manufacturing orders improve after Brexit delay, report shows

The CBI’s industrial trends survey showed orders stood at their highest level since August, although still far below long-term averages.

Manufacturers expect output to be largely flat over the next few months (Owen Humphreys/PA)
Manufacturers expect output to be largely flat over the next few months (Owen Humphreys/PA)

By Holly Williams, PA Deputy City Editor

Britain’s manufacturers have been offered some respite as battered order books improved in November after a no-deal Brexit was avoided last month, according to a survey.

The CBI’s industrial trends survey showed orders stood at their highest level since August, although still far below long-term averages, marking a pick up from the near-decade low levels last month.

It showed the orders balance rose to minus 26 from minus 37 in November, while export orders also increased from the lowest levels since the financial crisis seen in October.

While the thick fog of uncertainty from a no-deal Brexit has lifted somewhat, the manufacturing sector remains under pressure Anna Leach, CBI

Activity in the sector also stabilised, but remained under pressure as output by volume fell at a similar pace to October.

Manufacturers also expect output to be largely flat over the next few months as the UK grapples with a snap General Election on December 12 and the next looming Brexit deadline of January 31.

Anna Leach, deputy chief economist at the CBI, said: “While the thick fog of uncertainty from a no-deal Brexit has lifted somewhat, the manufacturing sector remains under pressure from weak global trade and a subdued domestic economy.

“Order books remain below average, and output volumes continue to fall.

“When taking into account the deteriorating outlook for manufacturing globally, it’s clear that the outlook for the sector remains precarious.”

Howard Archer, chief economic adviser at the EY Item Club, said the better-than-expected survey result was welcome, but “does little to inspire confidence that better times lie just around the corner for the manufacturing sector”.

He added the manufacturing sector is still set to act as a drag on wider economic growth in the final quarter of 2019, pencilling in growth of 0.2%.

Mr Howard said: “Manufacturers have clearly taken a hit from prolonged Brexit uncertainty, which is extending business caution over investment decisions and the purchase of capital goods.”

The CBI poll of 307 manufacturers showed that output declines were driven largely by the motor vehicles, metal products, and metal manufacture sectors.

But this was offset by increased activity in mechanical engineering and plastic products sectors, alongside a boost from aerospace output.

PA

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