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Manufacturers’ pains soften despite ‘Brexit millstone’ hampering firms

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DAGENHAM, ENGLAND - JANUARY 13: An employee works on an engine production line at a Ford factory on January 13, 2015 in Dagenham, England. Originally opened in 1931, the Ford factory has unveiled a state of the art GBP475 million production line that will start manufacturing the new low-emission, Ford diesel engines from this November this will generate more than 300 new jobs, Ford currently employs around 3000 at the plant in Dagenham. (Photo by Carl Court/Getty Images)

Britain’s manufacturing headaches softened slightly over the last three months, with output stabilising despite “relentless Brexit uncertainty” continuing to weigh heavy on the industry.

Manufacturers reported output fell less sharply over the three months to August, according to the CBI’s monthly industrial trends survey, meaning the industry is still in decline but the rate of that decline has slowed.

Over the period, 24 per cent of the 286 businesses surveyed reported rising output, while 27 per cent said it was down, giving a minus three per cent balance. Respondents expected output levels to remain unchanged over the next three months.

Chair of CBI Manufacturing Council and Ineos director Tom Crotty said: “Relentless Brexit uncertainty has continued to be a millstone around the neck of manufacturing firms as we approach the end of the summer.”

Manufacturers expect to keep output prices in the next three months broadly unchanged – the lowest balance since February 2016.

‘Double whammy’

It is not only Brexit uncertainty which is hurting manufacturing companies, however. Firms are still suffering from both soft domestic and foreign demand, but to a lesser extent than in July.

Total order books were below normal, with a balance of minus 13 below normal compared to a balance of minus 34 in July. The same was reported of export order books, which had a balance of minus 15, compared to a minus 32 balance last month.

Bombardier’s Derby train manufacturing plant (Getty Images)

CBI deputy chief economist Anna Leach said: “Despite signs of stabilisation in the data this month, UK manufacturers remain on the receiving end of a double whammy: the slowdown in the global economy and Brexit uncertainty.

“Trade tensions between nations such as China and the US only exacerbate the demand uncertainty facing UK manufacturers.

“As we get closer to October, it’s crucial that the new Prime Minister secures a Brexit deal ahead of that deadline and gets on with pressing domestic priorities, from improving our infrastructure to fixing the apprenticeship levy.”

Main image: Getty