British manufacturers have, surprisingly, enjoyed rising output and a steady flow of new orders over the last three months, according to a new survey by the CBI.
The news comes after a mixed month of reports, alternately saying that the UK has seen no significant hit from the Brexit vote and that business confidence is at a 4 year low. Naturally then, confusion has run rife in the UK, but this latest report from the Confederation of British Industry delivers fresh evidence that manufacturing has come through the Brexit vote with relative strength.
The survey of 481 manufacturers found that total order book balance held at -5, well above its long term average of -15 and matching the prediction poll of Reuters economists. It also found that manufactures’ expectations for the next three months orders had picked up strongly, despite a dip in export orders.
The survey showed 18% of businesses reported total orders to be above normal and 22% reporting below normal levels of orders, leading to that -5% reading.
The CBI’s chief economist, Rain Newton-Smith said “It’s good to see that manufacturers are enjoying a lingering summer with output running at a strong pace and manufacturers’ order books remaining solid, particularly amongst the food, drink and motor vehicles sectors,”
"Our members tell us and our surveys show that the fall in sterling has boosted international competitiveness for many businesses, with export order books remaining well above average in September, despite weakening slightly,"
“But there are plenty of challenges ahead for manufacturers as we adjust to a new relationship with the EU and the rest of the world.”
Rain also urged the chancellor, Phillip Hammond, to help manufactures compete globally by promoting investment and innovation in the sector during his autumn statement in November. Mr Hammond is expected to set out how the government will use tax and spending measures to help support the post-EU economy. However, the real boon to British manufacturing businesses will be to secure free trade agreements with the EU and the rest of the world.
The CBI also disagree with the BCC’s assessment that the falling value of the pound has only had a minor impact on exports, and will hurt growth in the medium and long term, saying “Our members tell us and our surveys show that the fall in sterling has boosted international competitiveness for many businesses, with export order books remaining well above average in September, despite weakening slightly,”
As always, however, strong performance amid manufacturers is imbalanced, heavily favouring the motor vehicle and transport sectors, rather than made to order stainless steel fittings companies like us. It was chemical firms, however, which saw the sharpest downturn in fortunes as large overseas contracts dried up amid the uncertainty of Brexit.