Domestic boost for UK industry in second half
A BOOST to industrial orders this month is bucking expectations for a slowdown in the second half of the year, according to a major UK business body.
The Confederation of British Industry (CBI) released its latest survey yesterday morning, with 29 per cent of manufacturers reporting stronger orders than usual, against 18 per cent suggesting that orders are weaker.
The net balance of 11 per cent is much stronger than July’s two per cent, and well above the survey’s long-term average.
Although many analysts have expected that Britain’s rapid pace of growth will slow down during the second half of the year, far more factory firms are expecting growth.
This month, 42 per cent of industrial businesses reported that they expected output growth in the quarter ahead, against just 11 per cent that projected a contraction.
Official figures showed disappointing manufacturing growth in the second quarter, with an rise of just 0.2 per cent from the first quarter.
“The survey also indicated that the industrial recovery looks set to remain domestic-led. Although the export orders balance rose from -16 to -3 in August, it was still well below the overall orders balance,” said Paul Hollingsworth of Capital Economics.
He continued: “Other survey evidence such as the Bank of England agents’ scores suggest that the strength of the pound is stifling exports. So, the manufacturing recovery looks set to be strong, but not spectacular for now.”
CBI deputy director general Katja Hall echoed the sentiment, saying: “With growth flat at best in the Eurozone and sterling having risen in recent months, there are still some headwinds to export demand. We need more manufacturers exporting to high-growth markets.”