A closely-watched survey by Markit showed last week that the United Kingdom private sector activity contracted at the steepest pace since early 2009, post-Brexit.
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Export orders are expected to rise at an above-average pace over the next quarter, the CBI said.
It found that 52% of firms were less optimistic about the general business situation compared to three months ago, while 5% of businesses were more optimistic, leaving a balance of minus 47%. The survey adds to signs the Brexit vote might be starting to take a toll on Britain’s already slowing economy, following a survey from Markit that suggested business activity is declining at the fastest rate since 2009.
And despite the gloom about the outlook for United Kingdom manufacturing, the survey found that output rose by 16% in the last 3 months, its strongest growth for 2 years.
The survey also found that the U.K.’s competitiveness in global markets improved at the strongest pace in over six years, partly due to a weaker sterling, with a further boost expected next quarter. Intentions for investment in buildings over the next 12 months decreased to -23% last quarter from +6% in April.
The CBI Industrial Trends survey, which was carried out post the Brexit decision, showed the balance of total orders fell only to -4 in July from -2 in June, though this was was slightly better than the consensus forecast of a fall to -6.
Manufacturers are scaling back investment, according to the survey.
Manufacturing output and domestic orders grew over the last quarter, but optimism about the business situation fell at the fastest pace since January 2009 following the European Union referendum, a survey released on Monday (25 July) showed.
The survey of 506 manufacturers across the United Kingdom found that expectations for total new orders growth are at their lowest since January 2012.
“But business optimism has fallen to its lowest level since Q1 2009, and new orders are expected to be flat in Q3 as a whole, the worst expectation since Q1 2012”.
Samuel Tombs, chief United Kingdom economist at Pantheon Macroeconomics, said the survey was a further sign that the United Kingdom economy was heading for a recession.
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“Meanwhile, a small majority of manufacturers expect to cut headcounts and to reduce investment in plant and machinery”.
