UK manufacturing order books slip back in three months to February

Around 30 per cent of firms reported above normal books, while 10 per cent said they were below normal, giving a balance of 10 per cent

Manufacturing accounts for around 10 per cent of the UK's GDP (PA)

UK manufacturers’ order books deteriorated slightly in the three months to February, according to the latest CBI Industrial Trends survey.

Around 30 per cent of firms reported above normal books, while 10 per cent said they were below normal, giving a balance of 10 per cent.

This was down from 14 per cent in the previous month’s reading, although still well ahead of the series’ long-run average of –14 per cent.

The net balance for export orders also declined from 19 per cent to 10 per cent.

“Although order books weren’t quite as buoyant as they were last month, demand remains strong and output grew briskly,” said Anna Leach of the CBI.

“With the Brexit negotiations reaching a critical juncture, many businesses are concerned about future barriers to trade and are looking for clarity over the future relationship with the EU. Remaining in a comprehensive customs union will help alleviate some of those fears and give firms the confidence to invest and grow.”

Despite the uncertainty created by Brexit, UK manufacturers have been bolstered over the past year by the booming global economy and also the slump in sterling since the 2016 Brexit vote.

The Office for National Statistics has estimated that the sector expanded by 1.3 per cent in the final quarter of 2017, following a similarly substantial gain in the third quarter.​

“The CBI survey points to some loss of momentum in the manufacturing sector in the first quarter of 2018 after a buoyant performance through the second half of 2017,” said Howard Archer of the EY Item Club.

“This fuels our suspicion that GDP growth is likely to ease back to 0.4 per cent quarter-on-quarter in the first quarter from 0.5 per cent quarter-on-quarter in the fourth quarter of 2017.”

Manufacturing accounts for around 10 per cent of the UK’s GDP.

The CBI survey also indicated a sharp drop in expected sales price inflation, with the net balance falling from 40 per cent in January, a 34-year high,

However, this remained well above the long-term average balance of 2 per cent. Sales prices have been pushed up by last year’s spike in oil prices to more than $70 a barrel.

The Industrial Trends survey was conducted between 26 January and 13 February 2018 and covered 397 firms.