UK manufacturing growth steady but outlook for exports “gloomy”

UK manufacturing growth continued steadily in the three months to July, according to the latest survey from the CBI, however, it warned the outlook for exports looks “gloomier” in the next quarter.

In its latest Quarterly Industrial Trends Survey, the CBI reported slower growth in total new orders in the quarter to July, though it remained above average. Growth in total new orders, output and numbers employed are projected to remain firm over the next quarter.

It said the volume of new export orders rose slightly in the last three months, but the outlook for the next quarter is gloomier. Survey respondents continue to report sharp falls in competitiveness in the EU, likely linked to Sterling rises earlier in the year. Political and economic conditions abroad were also seen as a constraint on orders by a significant number of firms.  

Investment intentions remain broadly similar to the last quarter, staying above their long-term averages, with plans for spending on building and plant and machinery improving slightly.

“Manufacturers are continuing to feel the pressure from the stronger pound,” explained Katja Hall, CBI Deputy Director-General. “Greater buoyancy in exports remains a missing element from the UK’s recovery. Nevertheless we’re encouraged by the Government’s commitment to take steps to address this as part of its recently announced productivity plan.

“The EU remains our largest trading partner, so while the UK economy’s direct exposure to Greece is minimal, we must encourage all leaders to act decisively to preserve growth and stability throughout the Eurozone.

“Despite Sterling pressures and the challenging global backdrop, investment intentions remain above average, particularly in innovation and training.”