Wired-GOV Newswire (news from other organisations)
|Printable version||E-mail this to a friend|
CBI: Manufacturing prospects muted after Brexit
Manufacturing output and domestic orders saw firm growth over the past quarter, but both are expected to slow over the next three months, according to the latest quarterly CBI Industrial Trends Survey.
Following a slowdown in activity towards the end of 2015, which spilled over into the first half of this year, the survey of 506 manufacturers shows that the sector had a decent recovery over the three months to July. Output rose at its fastest in two years, while domestic orders and employment also improved. Export orders were flat, but improved on the fall seen in the previous quarterly survey.
But despite this improvement in activity, optimism about the business situation over the past quarter fell at the fastest pace since January 2009, in the aftermath of the referendum result. Meanwhile, the outlook for the next three months is set to soften, with expectations for total new orders growth at their lowest since January 2012, output growth set to ease and headcount expected to fall slightly.
Looking ahead to the coming quarter, concerns over economic and political conditions abroad as a constraint on exports orders are at their highest level since 1983. Yet, competitiveness in international markets has improved at the strongest pace in over six years, with a further boost expected next quarter. As a result, export orders are set to rise at an above-average pace over the next quarter.
Investment is also expected to be lower over the coming year compared with the last twelve months, with planned capital expenditure on buildings and plant & machinery easing from the multi-decade highs seen in the previous survey. Nevertheless, both were still broadly in line with average levels.
Rain Newton-Smith, CBI Chief Economist, said:
“Manufacturers picked up the pace over the second quarter, with output growing solidly. We’re also seeing encouraging signs of a boost to export competitiveness from a weaker sterling.
“But it’s clear that a cloud of uncertainty is hovering over industry, post-Brexit. We see this in weak expectations for new orders, a sharp fall in optimism and a scaling back of investment plans.
“So, it’s important now for the new Government to steady the ship with a plan, and a clear timetable, for negotiating the UK’s relationship with the EU. This, along with a renewed focus on industrial strategy, will help give firms the confidence they need to grow and create jobs.
“Manufacturers look forward to working with the new Government to preserve the openness of the UK’s economy to markets, skills and trade.”
Key findings – past quarter:
- 30% of firms said the volume of output over the past three months was up and 14% said it was down, giving a balance of +16%. This brought the pace of growth to levels last seen two years previously (+23% in July 2014)
- 32% of businesses reported an increase in total orders, and 23% a decrease, giving a balance of +9%, the highest since July 2015 (+9%)
- The balance for new domestic orders (+11%) rose to its highest since July 2015 (+12%)
- Export orders were broadly flat (-2%) following a slight fall in the last quarter’s (-7%)
- 27% of manufacturers said employment numbers were up, and 18% said they were down, giving a rounded balance of +8%: above the long run average (-9%) and the highest since July 2015 (+10%)
- 5% of firms said they were more optimistic about the general business situation than three months ago, but 52% said they were less optimistic, giving a balance of -47%. This was the lowest figure since January 2009 (-64%). Optimism about export prospects for the year ahead also fell (-11%)
- Average domestic prices (+9%) rose at their fastest since July 2011, while average export prices were flat (+3%), but the survey balance was the highest since April 2012 (+4%)
- Manufacturers’ investment intentions compared with the previous twelve months deteriorated, both for buildings (-23%, from +6% in April) and plant & machinery (-5%, from +17% in April). Plans for spending on training & retraining remained positive (+16%, from +19% in the previous quarter +19%)
- The number of firms citing political/economic conditions abroad as a constraint on export orders in the coming three months rose to a thirty three year high (+53%, the highest since January 1983 (+54%))
- Competitiveness in the EU (+6%) improved at the fastest since April 2010 (+16%). It also rose in non-EU markets (+12%).
Key findings – next quarter:
- Total new orders are expected to be flat (0%), the lowest balance since January 2012 (-2%). Domestic orders are also anticipated to be broadly flat (+1%)
- A balance of +10% expect export orders to rise (21% expect an increase, and 11% a fall)
- 19% of businesses anticipate a rise in output volumes, and 12% a fall, giving a rounded balance of +6%
- 14% expect employment to increase, and 20% expect it to decline, giving a balance of -6%
Separately, the CBI published monthly figures for July, which showed that output growth improved slightly (+16%, the highest since February (+17%)). Total order books were broadly the same as in June (-4%, from -2% in June) but export order books deteriorated (-22%, from -14% in June).
Latest News from
Wired-GOV Newswire (news from other organisations)
Legal Aid Agency - Civil/crime news: eligibility for legal aid and universal credit25/03/2017 09:10:00
Ministry of Justice consultation on proposals to amend legal aid financial eligibility system to accommodate expansion of universal credit.
UK Space Agency - SatelLife competition winners announced25/03/2017 08:10:00
Nine young space entrepreneurs have won a share of £50K for innovative ideas on how to use satellite data to improve life on Earth.
Northern Ireland Office - Political talks update by Secretary of State24/03/2017 16:10:00
James Brokenshire delivered a short statement to reporters outside Stormont House, Belfast on Friday 24 March
CBI: Business leaders prepare to quiz mayoral candidates24/03/2017 15:20:00
Company chiefs are looking forward to hearing from mayoral candidates ahead of the forthcoming Greater Manchester Combined Authority (GMCA) election.
Unite - Speech and language therapists get ‘collective snub’ from NHS shake-up bosses24/03/2017 14:20:00
Leaders of the controversial Sustainability and Transformation Plans (STPs) to reconfigure the NHS have been accused of ‘a collective snub’ to the UK’s 15,000 speech and language therapists (SALTs) by declining to answer questions on the profession’s future.