UK export orders fall significantly, says CBI

While manufacturing is doing well and expanding, UK export orders have fallen significantly, says the CBI’s latest Industrial Trends Survey involving 488 manufacturers across the country.

The survey was carried out from August 20th to September 10th. It showed that while output growth remained strong in the last quarter and is forecast to accelerate in the next quarter, order books are falling, and export orders have worsened considerably.

The slowdown in the Eurozone, which reported zero growth in the second quarter, uncertainty regarding the Scottish referendum, tensions between Russia and Ukraine, plus growing economic sanctions against Russia by the EU and United States, have led to a less favorable climate for exporters.

According to the respondents, export order books are at their lowest levels since January 2013.

Inflation expectations continued muted while stocks adequacy fell back below average. Manufacturers predict prices will remain flat during the next three months.

Katja Hall

Katja Hall described the fall in export orders as disappointing.

CBI Deputy Director-General, Katja Hall, , said:

“Against a backdrop of acute political uncertainty at home and abroad, exports orders for UK manufacturers are faltering, which is disappointing. However, it’s encouraging that output growth has remained solid and firms expect production to rise strongly in the next quarter.”

Below are some key findings from the survey:

  • Thirty-four of respondents reported a rise in volume of output during the last quarter, 19% said it declined,
  • 36% predicted volumes would rise next month, while 9% said they would fall,
  • 14% of companies reported above-normal order books, while 38% said they were below normal,
  • 8% expected output prices to increase during the next quarter, while 7% saw them falling,
  • 16% of companies said their current stocks of finished products were more than adequate, while 6% said they were less than adequate.

The UK’s Office for National Statistics reported earlier in September that industrial output had grown by 0.5% in July, the biggest monthly increase in five months. It also informed, however, that the country’s trade deficit had widened to ₤10.186 billion. July’s deficit was the biggest in two and a half years.

Most UK economists believe that sustained domestic demand growth and marginally stronger Eurozone expansion in 2015 should help the British manufacturing sector’s recovery.