Export decline hits manufacturing growth

The survey of 448 firms reported sustained above average growth in orders and output volumes. Yet the pace of growth for both in the last three months was the slowest for a year. The rate of expansion in domestic new orders eased a little, and export orders experienced their first decline in a year and a half. Despite this, numbers employed in the manufacturing sector continued to grow strongly. Firms anticipate continued growth for the next three months, but there are reduced expectations for total new orders and exports growth, according to the CBI. "Looking to the year ahead, manufacturers' plans for investment in buildings slipped to their weakest in a year, but in plant and machinery, and product and process innovation, they stayed well above average," it said. It added: "The proportion of firms concerned that political and economic conditions abroad may limit export orders remained above its long-run average for the second successive quarterly survey." Rain Newton-Smith (pictured), CBI director of economics, said: "It's disappointing that a sluggish exports market has taken some of the steam out of manufacturing growth, which was going from strength to strength throughout most of this year. "However, growth in orders and output is expected to continue ahead, albeit with expectations moderating, and domestic orders have continued to rise at a healthy pace. And it is encouraging that job numbers are growing. "Nevertheless, the manufacturing sector is clearly facing headwinds. Global political instability, mounting concerns about weakness in the Eurozone and recent rises in Sterling are all weighing on export demand." Almost a third (31%) of businesses reported an increase in total new orders and 21% a decrease, giving a rounded balance of +9%. This was above the long run average of -2%. The balance for new domestic orders (+14%) was also well above the long run average (-5%). The balance for export orders (-7%) and export deliveries (-5%) both dropped to their lowest levels since January 2013 (-13% and -7% respectively). Just over a quarter (27%) of manufacturers said employment numbers were up, and 12% said they were down, giving a balance of +15%. A fifth (21%) of firms said they were more optimistic about the general business situation than three months ago, and 13% less, giving a balance of +8%. A quarer (26%) reported a rise in output volumes, and 15% a decrease, giving a balance of +11% Separately, the CBI published monthly figures for October, which showed that total order books among manufacturers edged down to -6%, the lowest level since July 2013 (-12%). Export order books also remained weak relative to earlier in the year (-23%), but output grew (+11%).