Manufacturing under pressure as growth stymies

Posted on 4 May 2015 by Callum Bentley

The CBI’s latest Growth Indicator shows growth in the three months to April is holding up at around the average pace since mid-2014.

Solid growth in the service sector compensated for a poorer performance in manufacturing, which has been hit by weak export orders and the rising pound.

Firms again expect growth to pick up over the next three months, although optimism has continued to decline slightly since the turn of the year.

The Growth Indicator, derived from CBI surveys of 756 businesses, brings together economic-activity data from a range of business sectors. The reading of +19% for the three months to April was little changed from the three months to March (+18%) and February (+19%).

Businesses expect growth to strengthen moderately in the months ahead, particularly in the retail and manufacturing sectors. The balance of expectations for output growth over the next three months (May – July) is +23%. That represents somewhat stronger growth than was recorded over the last three months.

Katja Hall, Deputy Director General, CBI.
Katja Hall, deputy director general, CBI.

Katja Hall, CBI deputy director general, commented: “UK economic growth appears resilient. Our surveys and member feedback indicate prospects for 2015 as a whole remain bright, with lower oil prices and inflation boosting household spending power and helping businesses, aside from the hit taken by the North Sea oil industry.

“Promisingly, there are early signs of stronger growth in the Eurozone, which should help UK exports. But the strengthening pound is undermining manufacturers’ competitiveness in the euro area, while uncertainty around the election seems to be knocking businesses’ investment plans.”