Manufacturers did better than expected in November, despite Brexit fears

 
Billy Bambrough
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The fall in the value of sterling has boosted exporters
The fall in the value of sterling has boosted exporters (Source: Getty)

Manufacturers have posted their best month for orders since before the UK's vote to quit the European Union, beating economist expectations, and confounding Brexit slowdown fears.

Optimism for coming months also increased with expectations for production over the next quarter reaching their highest level since February 2015.

For November, manufacturing order books improved but export order books and output growth eased, according to the CBI’s latest Industrial Trends Survey.

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The fall in the value of the pound since the Brexit vote has also boosted exporters.

In the wake of sterling’s sharp depreciation, manufacturers expect to increase average selling prices over the next three months, at the fastest pace since January 2014.

Almost a quarter (23 per cent) of manufacturers reported total order books to be above normal, and 26 per cent said they were below normal, giving a balance of -3 per cent.

This was above an average of -15 per cent, and similar to the balance seen throughout the summer and beat consensus expectations of -8 per cent.

The survey of 430 manufacturers found that total order books returned to levels seen throughout the summer, and well above the long-run average. Meanwhile, export orders dipped a little, but remained above average.

Output volumes rose though at a slower pace over the past three months.

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Rain Newton-Smith, CBI chief economist, said:

It’s good to see manufacturers’ overall order books at healthy levels, and the outlook for output growth remaining robust as we head into Christmas.

But the weak pound is beginning to make its mark, and prices are expected to rise, especially in the food and drink sector. On the flip side though, export orders remain above average.

To bolster British industry, manufacturers want to see bold decisions in the Autumn Statement. A crystal clear focus is needed on infrastructure, investment and innovation from the Chancellor, so that firms are given the very best environment in which to grow, both at home and abroad.

Read more: Looming dangers demand an urgent rethink of monetary policy in Britain

Three quarters of the rise in the balance comes from the food and drink sector, with price hikes for popular household commodities.

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