EEF report warns of plunging manufacturing export balance
4 Dec 2018
British manufacturing’s export balance has halved in the last quarter of 2018, reports the latest EEF/BDO Manufacturing Outlook survey.
While the output order balance of 22% overall compares well with historical performance and represents the ninth consecutive quarter of positive output, the EEF said there has been “a clear moderation in the strength of balances during the course of 2018”.
The trend has accelerated in the fourth quarter, said the report authors, with strong divergence between domestic and export orders. EEF chief executive warned there were “more clouds on the horizon than there have been for some time”.
The findings based on a survey of 329 companies from 31 October to 21 November revealed that the UK domestic orders balance was 14% in Q3 and held up at 11% in Q4. Export orders however plunged from 24% to 12% in the same period.
Manufacturers have remained reasonably confident over the course of the year but the sharp decline in export orders is a real cause for concern.
Tom Lawton, head of manufacturing, BDO
Weaker global growth, fading effects of sterling devaluation and the impact of protectionist policies were blamed in part for this but continued Brexit uncertainty was cited as the key factor by the EEF.
Head of manufacturing for co-author business advisory firm BDO, Tom Lawton added: “Manufacturers have remained reasonably confident over the course of the year but the sharp decline in export orders is a real cause for concern.
“Overseas demand has helped sustain manufacturing growth over the last few years and the EU remains the most important trading block for UK manufacturers. It is crucial that Britain is seen to be open for business with the EU and other key global markets.”
The EEF has downgraded its its growth forecast for manufacturing in 2019 to just 0.3% from 0.5%. GDP forecasts remain unchanged for 2018 and 2019 and are both at 1.3%.
NEWS: Business secretary Greg Clarke, Labour leader Jeremy Corbyn and broadcaster Andrew Neil are among the speakers appearing at the EEF’s National Manufacturing Conference titled ‘Facing The Future Together – preparing for Brexit and a changing world’, at the Queen Elizabeth ll Centre, London on 19 February 2019.
