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Manufacturing loses steam as orders slow, CBI survey shows
Factory order books weakened in May and output growth slowed to its weakest for more than two years in signs that UK manufacturing may have peaked as the world economy slows.
The volume of factory orders slowed to its lowest since November 2016 and output was broadly flat - the weakest showing since April 2016, the CBI's monthly manufacturing survey showed. Output rose in only eight of 17 sub-sectors with contraction sharpest in chemicals, food, drink and tobacco.
The CBI said its survey showed UK manufacturing losing some impetus after a prolonged period of strong growth spurred by the strong global economy and the pound's decline in currency markets, making British goods cheaper for overseas buyers.
Anna Leach, the CBI's head of economic intelligence, said: "UK manufacturing has lost some steam since the start of the year on the back of a softening in both domestic and global growth.
"While global economic growth - particularly in the EU - has disappointed in the first quarter of the year, demand from overseas continues to shore up manufacturing activity in the UK, with export order books remaining well above historical average."
After surprising on the upside, the global economy appears to be slowing down. The UK has been near the bottom of growth tables for developed countries as consumers have been squeezed by falling spending power but manufacturing, which makes up about 10% of the economy, has grown.
The CBI survey found that 22% of manufacturers reported order books above normal with 25% saying orders were below normal. The balance of -3% is the lowest since November 2016 but is above the long-term trend. The balance of firms saying output was up was +3%.
The survey does little to clarify a blurred picture of the UK economy which prompted the Bank of England to leave interest rates unchanged in May. Manufacturers expected the slowdown to be temporary, predicting a pick-up in output in the quarter to August. The survey was based on 411 replies the CBI received between 25 April and 11 May.