Tuesday 21 May 2019 12:30 pm

UK manufacturing orders slump in May while stocks grow amid Brexit impasse

Manufacturers in the UK saw order books slump in May, while recent Brexit preparations took stocks of finished goods to a decade high, according to the Confederation for British Industry (CBI).

Read more: Brexit stockpiling slowdown hurts UK manufacturing growth

Manufacturing output growth in the UK held steady in the three months to May, the CBI’s monthly industrial trends survey today showed.

The survey, which asks 280 manufacturing firms their views on the sector, found order books deteriorated again in May following a fall in April, with total orders reaching their lowest balance since late 2016.

The stockpiling of finished goods reached its post-financial crisis peak in May, despite the extension of Brexit until October, as 35 per cent said of firms said stocks of finished goods were “more than adequate”.

Stock-building supported economic growth in early 2019, but the CBI said business surveys suggest underlying conditions remain more subdued.

Output growth was predominantly driven by the mechanical engineering, chemicals, and food, drink and tobacco sub-sectors, the CBI said.

It said the motor vehicles and transport equipment and the textiles and clothing sub-sectors proved the biggest drags on growth.

The survey found that manufacturers expect output to be broadly flat in the coming quarter. It also found that their inflation expectations were at their lowest since March 2016.

Anna Leach, CBI deputy chief economist, said: “These results provide further evidence that manufacturers have been stockpiling at a rapid pace as part of their Brexit contingency plans.”

She said: “When combined with a sharp decline in order books, it’s clear why manufacturing firms are so keen to see a swift end to the current Brexit impasse.”

Tom Crotty, group director of INEOS and chair of the CBI Manufacturing Council, said: “Manufacturers are being forced into putting huge amounts of money and resources into contingency planning that could have been spent on creating jobs or making investments in new technology.”

Read more: British car manufacturing falls for tenth straight month

“As long as the deadlock continues, the sector is being held back from solving long-term challenges such as raising productivity and addressing skills shortages,” he said.

 

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