This news comes despite the survey of 506 manufacturers reporting a ‘decent’ recovery over the past three months to July. Output rose at its fastest in two years as the industry rallied following a slowdown at the end of 2015 and start of this year. Also improving were domestic orders and employment, while export orders remained at the same level as the previous quarter.
However, the EU referendum result has instilled some concern in the industry, the survey revealed. In spite of the improvement in output and orders, optimism about the business situation over the past quarter fell at the fastest rate since January 2009. Also, the outlook for the next three months is negative: total new orders are expected to be at their lowest since the start of 2012, output growth is set to ease and headcount is expected to fall.
The Brexit result, combined with concerns over the economic and political situation abroad, has led to the highest level of constraints on export orders since 1983, although competitiveness in international markets has improved at the highest rate in six years. This means that export orders are set to rise at an above-average rate in the next quarter.
“It’s clear that a cloud of uncertainty is hovering over the industry, post-Brexit,” said Rain Newton-Smith, chief economist at CBI. “So, it’s important now for the new government to steady the ship with a plan, and a clear timetable for negotiating the UK’s relationship with the EU. This, along with a renewed focus on industrial strategy, will help give firms the confidence they need to grow and create jobs.”
