Recent recommendations for UK manufacturers to concentrate on exports have been undermined by the Confederation of British Industry’s (CBI) latest monthly survey, released today, which reports a continuing decline in demand from overseas.
Of the 566 manufacturers taking part in the June Industrial Trends survey, 6% said export order books were above normal, while 58% described them as below normal. The resulting balance of -52% is the lowest since October 1998 (-55%), reversing the slight improvement that had been seen since March.
The British Chambers of Commerce (BCC) sent out a recent call to arms for businesses to utilize a 500m strong EU market for their products and services and Lord Davies, Minister for Trade and Investment said: “Most businesses overestimate the risks and underestimate the benefits of exporting.”
The Food and Drink Federation (FDF) revealed earlier this month that exports from UK food manufacturers are up 20 per cent in the last year.
However, the CBI’s survey suggests most manufacturers are not experiencing a similar trend.
“Export orders are no better than they were a few months ago,” said Ian McCafferty, the CBI’s chief economic adviser. “As such, conditions for UK manufacturers remain challenging with volumes of total orders still at very weak levels.”
However, signs that some business conditions are improving, inducing murmurs that an upturn could be imminent, are present in the CBI’s findings. There has been a modest improvement in total order book levels, suggesting that domestic conditions are no longer quite as weak. The pace of decline in output has also slowed.
Though still poor, a balance of -51% for total order books represents a slight improvement on the previous four months when the balance hovered between -56% and -58%.
The balance of expecting output to fall was consistent with May’s data (-17%) but this is still a big improvement from April (-32%).
“Manufacturing firms do expect output to fall at a much slower pace compared to the beginning of the year, as the drastic action they have taken to reduce stocks appears to be paying off,” added McCafferty. “Although the stock position somewhat improved on previous months, stock levels remain high relative to demand.”
Firms expect to lower domestic process will be lowered over the coming quarter (-6%) but at a much slower pace than they thought likely in previous surveys (-13% in May and -20% in April).