Manufacturing firms’ building investment intentions are back down to their weakest in eight years, according to the CBI’s latest survey of the sector.
The net balance for new capital spending on buildings over the next 12 months plunged to –30 per cent in October, the lowest since July 2009.
The net balance for plant and machinery investment spending also slipped to –7 per cent.
Other surveys have indicated that uncertainty related to future trade arrangements after Brexit in 2019 is discouraging investment among firms.
The CBI, along with other business lobby groups, are reportedly writing to the Brexit Secretary David Davis warning that if a post-Brexit trade transition deal with the rest of the EU after March 2019 is not agreed very soon there will be a cost in terms of UK jobs and investments.
The order books of UK manufacturers also grew at their weakest pace since April 2016 in October, according to the CBI’s latest survey, although the indicator is still above its long-term average.
Optimism dipped too, hitting its weakest since the immediate aftermath of the Brexit vote in 2016.
“We’ve seen a general softening in manufacturing activity over the past three months, with the outlook for investment becoming more subdued,” said Rain Newton-Smith, the CBI’s chief economist.
Weakest since 2009
The CBI’s Industrial Trends Survey was conducted between 26 September and 12 October and covered 399 manufacturing companies.
The Office for National Statistics estimates that manufacturing contracted by 0.3 per cent in the third quarter of 2017.
However, an expansion of 0.4 per cent in both July and August suggests the sector has since returned to growth.
The ONS will release its preliminary estimate for Q3 GDP growth, including manufacturing output, on Wednesday.
Official data suggests that business investment grew by 0.5 per cent in the second quarter, after an 0.8 per cent expansion in the first quarter.
Manufacturing accounts for around 10 per cent of UK GDP.
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