Even though uncertainty over Brexit and the negotiations over the U.K.’s exit from the EU has hold back investments from the industry, the weak pound has assisted in driving up export demands which has led to the growth of in the UK manufacturing output to a point that is at a 29-year high for the economy.
The highest monthly average since August 1988 in the manufacturers reporting total orders was noted in the three months to November where the manufacturing sector recorded a balance of +17% more on the total orders above normal, found the CBI’s industrial trends survey.
In the survey, while 11% of the manufacturers said that they had got total orders below normal, 28% of manufacturers had reported that their total order books were above normal, and the balance was derived from the difference of the two.
The strongest balances in total order books were reported for the food & drink and chemicals sectors.
There has been a growth from the +5 that the figure was in the month of October, and the export order books and export orders balance surged to +20% which is a 20-year high. This is equal to the record high that was reached in the month of June of 1995. chemicals, electronics and transport goods are the sectors that saw export order books strengthening significantly.
However, the lowest level for this balance since August 2016 was reached as it fell from +19 to +13 even while the balance of manufacturers expect the output to continue to rise over the next three months till the month of February.
“UK manufacturers are once more performing strongly as global growth and the lower level of sterling continue to support demand,” said Anna Leach, the CBI’s head of economic intelligence.
“Nonetheless, uncertainty continues to hold back investment and cost pressures remain strong. Manufacturers will be hoping the Budget brings some relief from the business rates burden in particular.”
The fall in output expectations “suggests that many manufacturers are running at full capacity and can’t easily increase production in the near-term to meet higher demand”, said economists at Pantheon Macroeconomics.
Since the time of just after the referendum, the least optimistic about the overall economic outlook of the U.K. was the manufacturers, found last month’s quarterly CBI survey, he noted.
“In addition, manufacturers that planned to increase investment were outnumbered by those that planned to reduce capex. Accordingly, the boost to industrial production and exports from sterling’s depreciation likely will remain too small to compensate for the damage it has inflicted on consumers.”
(Adapted from Digitallook.com)