Manufacturing growth slows

British manufacturers registered a slowdown in order growth in August, but the sector continues to be boosted by the weak pound, according to new data from the Confederation of British Industry (CBI).

Its latest Industrial Trends Survey showed 13 out of 17 sub-sectors reporting growth, driven by the food, drink and tobacco sector.

But output growth “eased somewhat”, with the factory order book balance falling to +7 per cent from +11, although the CBI said that was still well above the long-run average.

The CBI’S head of economic intelligence Anna Leach said: “Manufacturing growth remains strong, supported by the lower level of sterling and strong global economy.

“But risks to that growth remain high in light of international trade tensions and the uncertainty caused by Brexit.

“Firms will be keen to see urgent progress on the Withdrawal Agreement to lock in transition, which is crucial to continuing frictionless trade as the UK leaves the EU.”

The pound’s collapse following the June 2016 referendum has made British exports cheaper for foreign buyers.

But without a trade deal with the EU, British manufacturers will be subject to tariffs and other restrictions as the UK would sit outside the bloc’s single market. Leach added: “Make no mistake, a ‘no deal’ scenario would be immensely damaging not just for UK manufacturers, but also the rest of the EU.

“So both sets of negotiators need to demonstrate flexibility and compromise to protect trade flows worth [£467 million] each year, particularly against the backdrop of increasing protectionist rhetoric.”

The CBI also said a net 21 per cent of respondents reported higher output volume in three months to August. Manufacturers expect output growth to continue at a similar pace over the coming quarter. A net balance of +20 per cent expect growth in output.