Rising car sales lift gloom for manufacturing

Total order levels declined in September after growing in August, the CBI Industrial Trends Survey said, while export orders were the lowest since October last year.

However, there was some positive feedback from the industry, as manufacturers predicted orders will increase over the next three months and the production of cars was shown to have grown year on year for last month.

Howard Archer, chief UK and European economist at IHS Global Insight, said: “The weaker CBI survey deals a further blow to hopes that the manufacturing sector can make a sustained decent contribution to growth.

“Manufacturers are plainly now finding life much more challenging as domestic demand is held back by serious headwinds, notably including tightening fiscal policy and the serious squeeze on consumers’ purchasing power, while weaker global growth is hitting exports pretty hard.”

Meanwhile car production accelerated ahead last month, the Society of Motor Manufacturers and Traders (SMMT) announced.

A total of 86,250 cars were made in the UK in August – a 10.7 per cent rise on the August 2010 figure. Commercial vehicle (CV) production was also up, rising 9.3 per cent to 6,433.

Car production for the first eight months of this year was up 4.4 per cent compared with the January-August 2010 period, but CV production, despite last month’s rise, was down 4 per cent.

The encouraging production figures follow news earlier this week that Jaguar Land Rover is to invest £355m to build low-emission engines in Wolverhampton, potentially creating thousands of new jobs.

Also, UK automotive company CPP Global Holdings announced it would build a new version of iconic 1960s sports car the Jensen Interceptor at Jaguar’s former Browns Lane site in Coventry.

SMMT chief executive Paul Everitt said: “A manufacturing-led recovery is taking shape with August’s automotive output up more than 10 per cent and a recent wave of private investment securing long-term growth for the UK sector.

“We are on target to exceed 2010 production volumes this year, with more growth to come in 2012. Government must continue to encourage and incentivise private sector investment in research and development, skills and capital equipment to maintain momentum and deliver lasting opportunities for the UK supply base.”