Manufacturing activity bounces back after poor October showing, but Brexit doubts remain

Manufacturing activity picked up in the quarter to November, as the industry rallied after a disappointing October report, according to the latest statistics from the Confederation of British Industry (CBI).

The organisation's latest monthly Industrial Trends Survey said it expected manufacturers to benefit from ongoing global economic expansion and a low sterling exchange rate.

But weak growth in household income and an ongoing “drag on investment” from uncertainty over the terms of a possible Brexit deal are expected to subdue overall economic growth, with lower output expected in the next quarter, the CBI added.

Output volume growth outpaced the long-run average, accelerating in the three months to November, the survey found. Output expanded in 13 of the 17 sub-sectors, with food, drink and tobacco, motor vehicles and transport equipment, and chemicals driving growth.

Total order books bounced back after getting worse in October, when orders fell at their fastest rate in three years, while export order books also improved marginally, as both remained stronger than the historical average.

Rain Newton-Smith, CBI chief economist, said the improvements were “encouraging” but warned manufacturers’ prosperity still hinged on the handling of Brexit negotiations.

“The overwhelming message from business to the government is to make progress, don’t go backwards,” he said.

Tom Crotty, group director of Ineos and chair of the CBI Manufacturing Council, added that firms would have also “broadly welcomed the autumn Budget, especially the progress on Apprenticeship Levy reform”.

The reform saw an extra £90m of government funding going towards helping employers invest apprenticeship funds in people working for businesses in their supply chains.