UK manufacturing exports fell for the first time in three years in the second quarter of 2019 as global trade volumes softened to the greatest extent in seven years.
This fall during Q2 was caused by an end to stockpiling across the EU in the first quarter of the year, while trade tension between the US and China and softer global economic growth also contributed.
Meanwhile, nearly nine in 10 (85%) large UK firms surveyed reported exporting activity between April and June, the highest proportion since Q3 2015.
The findings show the resilience of the UK’s largest exporters amid trade tensions that have led to two thirds of the 29 countries surveyed by IHS Markit recording a decline in export sales.
The Manufacturing Export Orders Index posted a reading of 46.8 for new manufacturing export orders between April and June, down from a revised 50 in the first quarter. A reading of above 50 indicates growth, while one below 50 signifies contraction.
Despite this, eight out of the UK’s 10 key trading partners posted economic growth between April and June, suggesting significant opportunities for growth exist for businesses willing to diversify into new markets.
Gwynne Master, managing director and global head of trade for Lloyds Bank Global Transaction Banking, said: “There’s no doubting that there are challenges for exporters in the current climate, but our largest international businesses are showing exporting resilience.
“With most of the UK’s key trading partners’ economies growing, there are clearly opportunities to be had and this highlights the importance of a diverse exporting strategy. It’s also encouraging to see the highest proportion of large firms trading internationally for almost four years.
New overseas services sales fell for the third consecutive quarter in Q2, although at a slower rate than in Q1 2019. The index posted a reading of 48.6, up 1.8 points on Q1 but still below the 50 mark that signals growth.
The uptick was driven by the transport services sub-sector, which rebounded by 5.1 points in Q2 to 50.1. This sector includes UK logistics and storage businesses which likely benefitted from the stockpiling by EU firms in the previous quarter.
Gwynne Master concluded: “Our International Trade Portal can help both current and prospective exporters understand the best market for their products or services, the trading requirements and conditions they face and the buyers they may wish to work with. We’ve also committed to lending up to £18 billion to UK businesses this year to help them achieve their growth ambitions, both at home and overseas.”
