CBI: manufacturing stalls in September, outlook weak

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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.

The Confederation of British Industry said total orders and export orders deteriorated with demand from abroad falling back to its lowest level in six months.

The monthly total order book balance from the CBI’s industrial trends survey slipped to -7 in September from -1 in August. Economists had expected an unchanged reading.

Expectations for output over the next three months were the weakest since October 2013.

Rain Newton-Smith, CBI director of economics, said: “Exports are the missing link in the UK recovery at the moment, with the strong pound squeezing manufacturers’ margins, even though lower commodity prices are helping to ease cost pressures.

“Meanwhile manufacturers will have an eye on China’s slowdown and its effect on neighbouring markets. Boosting our export performance, alongside innovation, are vital to improving productivity.

“That’s why businesses want the Government to protect export and innovation spending, alongside other growth-boosting areas, in the Comprehensive Spending Review.”

Howard Archer, chief UK and European economist at IHS Global Insight, said the CBI survey will likely reinforce concerns that the economy is going through a soft patch in the third quarter, although he added that the manufacturing sector has largely been struggling throughout 2015.

Other survey evidence highlights the weakness of export orders, with manufacturers’ organisation the EEF reporting in its September quarterly survey that export orders for manufacturers had dipped to a six-year low.

In addition, the manufacturing purchasing managers reported foreign orders contracted modestly in August for a fifth month running, said Mr Archer.

He added: “Weakened manufacturing activity is worrying for hopes that UK growth can become more balanced and less dependent on the services sector and consumer spending.”

Across the UK, the CBI speaks on behalf of 190,000 businesses of all sizes and sectors which together employ nearly seven million people, about one third of the private sector-employed workforce.