BRITISH manufacturing output failed to expand in the three months to September for the first time since early 2013, adding to signs of a slowing in the country’s economy, an industry survey showed.
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This was a significantly weaker picture than that painted in the CBI’s August industrial trends survey when, subtracting the proportion experiencing a fall from that enjoying an increase over the previous three months, a balance of 14 per cent of United Kingdom manufacturers reported a rise in output volumes. Output has fallen in three of the last four months, with a dip of 0.8% mom in July, the most recent observation.
Export orders in both this and the manufacturing PMI survey have been far weaker than total orders in recent months.
Rain Newton-Smith, the business group’s director of economics, also blamedthe strong pound, which she said was having a major impact on exporters, forcing them to cut prices to remain competitive.
Eighteen per cent of manufacturers reported that the level of their order books was above normal, while 25% said it was below normal giving a balance of -7%.
Also, today data from the Office for National Statistics (ONS) showed borrowing – excluding the effect of bank bailouts – spiralled to £12.1 billion in August, dealing a blow to Chancellor George Osborne’s borrowing targets. A balance of -8 percent said average prices will fall in coming three months.
Despite the help of lower commodity prices to ease cost pressures, the strong pound is squeezing manufacturers’ margins, while China’s slowdown is affecting its neighbouring markets.
Ms Newton Smith urged the Government to do more to support the manufacturing sector in the Comprehensive Spending Review and Autumn Statement on November 25.
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IHS chief United Kingdom and European economist Howard Archer said: “The September CBI industrial trends survey will likely reinforce concern that the economy is going through a soft patch in the third quarter, although in truth the manufacturing sector has largely been struggling through 2015”.
