Manufacturing exports recover from seven-year low

While UK manufacturing exports fell for the third quarter in a row in the fourth quarter of 2019, growth in consumer goods exports slowed the rate of decline.

The Lloyds Bank International Trade Index, compiled in partnership with IHS Markit, posted a reading of 47.9 for new manufacturing export orders in the fourth quarter, up from 46.5 in the third quarter, which was the weakest for seven years. A reading of above 50 indicates growth, while one below 50 signifies a decrease.

A reading of 51.0 was posted for consumer goods in the fourth quarter, up from 48.2 in the third quarter. The growth was driven by "other manufacturing" exports, which includes sports and leisure equipment, homeware and hard luxury items, such as jewellery.

Gwynne Master, managing director and global head of trade for Lloyds Bank Global Transaction Banking, said: “Last year was a challenging period for UK exporters, so it’s encouraging to end 2019 with a strong outing for British consumer goods, alongside financial services and transport and communications services exports.

“The pull of Brand Britain and favourable sterling exchange rates helped exports of premium British products grow consistently last year, while new orders for other UK goods and services fluctuated in the face of political and economic uncertainty.

“The landscape for exporters is constantly changing, even as the UK enters 2020 on a firmer political footing. We will be by the side of businesses as they navigate changing global environments and work to take advantage of new opportunities.”

"Other manufacturing" is the only manufacturing export category measured by the index where new orders grew throughout 2019.

In contrast, UK services exports contracted at the fastest rate in five years in the fourth quarter of 2019, with an Index reading of 46.5. Servicefirms attributed the fall to delayed decisions from overseas clients ahead of the UK’s departure from the EU.

Financial services, together with transport and communications services, bucked the trend, with exports increasing between October and December.

Transport firms benefitted from a bout of inventory stockpiling by UK firms in the third quarter, but slowing economic growth and lower demand in European export markets contributed to the fall in overall UK trade volumes in the final quarter of 2019.

The economies of Germany and the Netherlands – two of the top five destinations for UK exports – contracted for the first time in six-and-a-half years according to IHS Markit surveys in the fourth quarter.

Weaker economic conditions were also recorded in Italy, Austria, Poland and the Czech Republic.