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UK manufacturers fear bleak outlook as export orders tumble

UK manufacturers have reported the weakest overseas demand for their goods for almost three years as they grapple with a strong pound and a weaker global economy.

The latest snapshot of factory order books and output from the CBI also showed companies expected output to fall over the coming three months – despite it having picked up in recent weeks, the business group reported.

The poll of 458 companies echoes other reports of manufacturers curbing investment and production as a downturn in China and other export markets knocks demand. Manufacturers also say they have been hurt by sterling’s strength against other currencies, which makes UK goods more expensive overseas.

“Poor export performance is weighing on the UK economy, as manufacturers are held back by a strong pound and a weakening global growth outlook,” said CBI economist Rain Newton-Smith.

While exports have come under pressure in recent months, the picture for UK demand has been more mixed. One recent survey suggested manufacturers enjoyed a recovery in output and new orders last month.

In the CBI poll, there were more companies reporting a rise in output in the three months to November than those reporting a drop. But looking ahead, more firms expected a fall than a rise in output in the next three months.

The survey found 20% of manufacturers believed the level of their order books was above normal, while 32% said it was below normal. The rounded balance of -11% was a small improvement on -18% in October’s poll.

But focusing on export order books, 11% of firms said they were above average, while 40% said they were below, a balance of -29% – the lowest level since January 2013.

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Newton-Smith reiterated calls on George Osborne not to cut back government support for exports and innovation in his spending review next week, when the chancellor will set out tighter budgets for government departments. “Furthermore, we would caution against the introduction of additional business costs that could hamper the competitiveness of UK manufacturers at home,” she added.


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