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UK manufacturers upbeat despite tough quarter – CBI UK manufacturers upbeat despite tough quarter – CBI
(35 minutes later)
Britain’s manufacturers managed to nudge up their production in the past three months and they are optimistic that both domestic and overseas demand will improve, according to an industry survey. Britain’s manufacturers managed to nudge up their production in the past three months and they are optimistic that domestic and overseas demand will improve, according to an industry survey.
Business lobby group CBI said its quarterly survey of factory bosses found that more reported a rise in output than a fall in the three months to April, marking the strongest performance since last July for the sector. But while the 472 manufacturers surveyed were upbeat about future demand, the past three months had been tough, with export orders falling again. The business lobby group CBI said its quarterly survey of factory bosses found that more reported a rise in output than a fall in the three months to April, marking the strongest performance since last July for the sector. But while the 472 manufacturers surveyed were upbeat about future demand, the past three months had been tough, with export orders falling again.
Factory output has been hit in recent months by a slowdown in global trade as well as a slump in demand for manufacturers’ wares from the struggling North Sea oil and gas industry. Steel plant closures have added to the woes of the manufacturing sector and thousands of job losses are expected this year.Factory output has been hit in recent months by a slowdown in global trade as well as a slump in demand for manufacturers’ wares from the struggling North Sea oil and gas industry. Steel plant closures have added to the woes of the manufacturing sector and thousands of job losses are expected this year.
A sluggish manufacturing sector and volatile trade in the construction industry mean that consumers have been left to drive economic growth. Economists expect that pattern to be confirmed in Wednesday’s publication of first quarter GDP figures. Economic growth is forecast to have slowed to 0.4% from 0.6% in the final months of 2015, according to a Reuters poll.A sluggish manufacturing sector and volatile trade in the construction industry mean that consumers have been left to drive economic growth. Economists expect that pattern to be confirmed in Wednesday’s publication of first quarter GDP figures. Economic growth is forecast to have slowed to 0.4% from 0.6% in the final months of 2015, according to a Reuters poll.
The CBI said that despite some glimmers of light in its survey, including a pick-up in employment over the past three months, the outlook remained challenging for manufacturers. The CBI said despite some glimmers of light in its survey, including a pick-up in employment over the past three months, the outlook remained challenging for manufacturers.
“Manufacturing has yet to pick up after a flat start to the year, with falling orders providing little impetus for production. While expectations for the upcoming quarter are encouraging, manufacturers are still facing sizable external headwinds,” said CBI director of economics, Rain Newton-Smith.“Manufacturing has yet to pick up after a flat start to the year, with falling orders providing little impetus for production. While expectations for the upcoming quarter are encouraging, manufacturers are still facing sizable external headwinds,” said CBI director of economics, Rain Newton-Smith.
There has been some support for UK exporters from a weaker pound, which has dipped on worries about June’s EU referendum resulting in a vote to leave the bloc. That makes UK goods cheaper for overseas buyers but at the same time it raises some manufacturers’ costs by making imported materials more expensive.There has been some support for UK exporters from a weaker pound, which has dipped on worries about June’s EU referendum resulting in a vote to leave the bloc. That makes UK goods cheaper for overseas buyers but at the same time it raises some manufacturers’ costs by making imported materials more expensive.
“The falling exchange rate should give some support to manufacturers, and investment intentions are strong,” added Newton-Smith.“The falling exchange rate should give some support to manufacturers, and investment intentions are strong,” added Newton-Smith.
The survey showed total new orders edged down in the three months to April, matching the pace of decline in the previous quarter. The latest deterioration was driven by a dip in export orders, while domestic orders were broadly flat. But asked about the coming three months, more manufacturers expected a rise than a fall in both output and demand.The survey showed total new orders edged down in the three months to April, matching the pace of decline in the previous quarter. The latest deterioration was driven by a dip in export orders, while domestic orders were broadly flat. But asked about the coming three months, more manufacturers expected a rise than a fall in both output and demand.
The CBI uses balances to gauge activity, demand and sentiment at manufacturing businesses. The balance for output edged into positive territory for the past three months, as 24% of businesses reported a rise in volumes, and 23% a decrease. That resulting balance of +1% compared with -2% in the three months to January. The orders balance was steady at -4%.The CBI uses balances to gauge activity, demand and sentiment at manufacturing businesses. The balance for output edged into positive territory for the past three months, as 24% of businesses reported a rise in volumes, and 23% a decrease. That resulting balance of +1% compared with -2% in the three months to January. The orders balance was steady at -4%.
For April alone, the orders balance improved to -11% from -14% in March.For April alone, the orders balance improved to -11% from -14% in March.
Looking to the year ahead, manufacturers’ plans for investment in buildings, and in plant and machinery were at “robust levels”, the CBI said.Looking to the year ahead, manufacturers’ plans for investment in buildings, and in plant and machinery were at “robust levels”, the CBI said.
Those intentions contrast with other reports that businesses are delaying spending and hiring plans until after June’s EU referendum. Those signs of caution have prompted the Bank of England to warn that economic growth could lose momentum over coming months.Those intentions contrast with other reports that businesses are delaying spending and hiring plans until after June’s EU referendum. Those signs of caution have prompted the Bank of England to warn that economic growth could lose momentum over coming months.
Commenting on the CBI survey, Samuel Tombs, UK economist at the consultancy Pantheon Macroeconomics, said: “In contrast to the message from other surveys, Brexit risk also does not appear to be dissuading investment.Commenting on the CBI survey, Samuel Tombs, UK economist at the consultancy Pantheon Macroeconomics, said: “In contrast to the message from other surveys, Brexit risk also does not appear to be dissuading investment.
“It is too soon to conclude, however, that the manufacturing sector is out of the woods. Sterling will bounce back if, as we expect, the UK votes to remain in the EU in June. Meanwhile, the domestic market for manufactured goods likely will remain weak as growth in consumers’ real income slows in response to rising inflation and intensifying austerity.”“It is too soon to conclude, however, that the manufacturing sector is out of the woods. Sterling will bounce back if, as we expect, the UK votes to remain in the EU in June. Meanwhile, the domestic market for manufactured goods likely will remain weak as growth in consumers’ real income slows in response to rising inflation and intensifying austerity.”