Brexit uncertainty has led to weakened manufacturing activity, says CBI survey

Manufacturing output growth slowed in the quarter to February, while order books improved slightly, according to the latest monthly CBI Industrial Trends Survey.

The survey of 366 manufacturers found that both total and export order books strengthened modestly on the previous month, while remaining comfortably above their respective long-run averages.

Output volume growth slowed in the three months to February to a pace roughly in line with its long-run average.

Output expanded on over half of the sub-sectors, with growth largely driven by the chemicals and food, drink and tobacco sub-sectors.

Meanwhile, the motor vehicles and transport equipment sub-sector were the main drags on growth.

Manufacturers reported that stock adequacy picked up, but remained broadly in line with the long run average, while expectations for price inflation in the next three months sped up to their quickest pace in a year.

UK manufacturers continue to be supported by the lower level of sterling, although weaker global economic momentum means less support for export orders from that front, but the continued threat of a no-deal Brexit poses the biggest risk to the outlook for UK manufacturers.

Anna Leach, CBI Head of Economic Intelligence, said: “UK manufacturing has moderated at the same time as headwinds for Brexit uncertainty and a weaker global trading environment have grown.”

“The time for Brexit compromise to support the UK manufacturing industry is now. The clock is ticking quickly towards crisis point. It is of critical importance that politicians of all stripes and on both sides of the channel come to agreement on the terms of a Brexit deal as soon as possible, to allow our manufacturers to continue to create, make and trade their goods with certainty."

Tom Crotty, Group Director of INEOS and Chair of CBI Manufacturing Council, said: “Manufacturers have proved highly resilient in the difficult circumstances they find themselves in. However, it is without much doubt that the Brexit uncertainty has been a millstone on growth and investment in the sector.”

“We are now just weeks away from the very real prospect of a no-deal Brexit, which would be hugely damaging to manufacturers up and down the country. The political paralysis on Brexit must urgently give way to compromise and an acceptable deal being struck.”