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Jonathan Greenhalgh Manufacturing

Insight: CBI Manufacturing Report

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A recent report published by the CBI business group forecasts a poor outlook as manufacturing orders seem to have slowed due to fears of a messy Brexit.

According to the report, as output has remained strong over the last 3 months, new UK manufacturing orders have fallen in the third quarter at the fastest rate for three years amid low confidence in the sector due to ongoing and disorderly Brexit negotiations.

6 percent of the 354 surveyed companies reported that orders fell during the third quarter compared to a positive balance of 15 percent during the second quarter, the lowest since 2015.

Export orders took a  steeper downturn from a positive balance of 21 percent of companies reporting increases in order book size, to a deficit of 8 percent again the lowest since October 2015.

Rain Newton-Smith the CBI’s Chief Economist declared this “This is a sobering set of figures demanding immediate action at home and abroad”.

Confidence about the future declined with 4 percent of companies stating that they expected lower volumes of new orders over the next three months, the weakest since the eurozone crisis in October 2011.

Manufacturers intentions to invest in new plant and machinery have fallen to their lowest since 2009 during the immediate aftermath of the financial crisis. 

“These figures are concerning and must not be taken lightly,” according to Tom Crotty the chair of the CBI manufacturing council and group director of one of Britain’s most prominent industrial groups, Ineos. 

Manufacturing businesses are also worried that a messy Brexit could leave supply chains broken with parts and components stuck at border crossings as the EU and UK start checks at borders.

This all being said, more broadly the UK Economy is holding up but growth is likely to be subdued amidst weak household income growth and the drops in investment due to Brexit.

Are you seeing these effects on your manufacturing business? discuss the topic further tweet @empsolrecruit to join the conversation.