21 May, 2018

Export picture looks brighter for UK manufacturers

19 April, 2010

Overseas demand for UK-made goods is continuing to recover with export order books the least depressed since August 2008, according to a CBI survey. Of the 499 manufacturers responding to the CBI’s monthly Industrial Trends Survey last month, 22 per cent said export orders were above normal and 40 per cent said they were below normal. The resulting balance of -18 per cent is an improvement on the previous month’s figure of -23 per cent, and the highest since August 2008 (-9 per cent). However, total order books remain depressed, reflecting the continued weakness of domestic demand. Some 14 per cent of manufacturers said they were above normal, while 51 per cent said they were below normal. The resulting balance of -37 per cent is broadly unchanged from the previous two months.

With total orders still fragile, firms anticipate only a modest rise in production in the next three months. Some 25 per cent said they expected output to rise in the next quarter, and 20 per cent anticipate a fall, giving a balance of +5 per cent. That compares with +7 per cent in February. Price expectations are the highest since September 2008. The balance of 17 per cent for March compares to 8 per cent in January and February.

Ian McCafferty, CBI chief economic adviser, said: “Our survey shows that UK exports orders are steadily improving as global demand is starting to recover. ‘Home-grown’ demand remains very weak, however, and as a result we can expect manufacturing output to grow only modestly for some time. Producer price inflation is expected to pick up further in coming months, to the fastest rate since autumn 2008. This reflects rising energy prices and increased import costs following Sterling’s decline, as manufacturers try to preserve their battered profit margins.” 
 

Problems to resolve 

The British Chamers of Commerce (BCC) has commented that if the Government is serious about encouraging British exports as a major source of job creation and economic growth, it must resolve problems around export trade finance. In a recent report, the business group says that some form of trade finance underpins 90 per cent of all global exports, easing the flow of international trade by moderating its risks. However, the BCC argues that UK firms are still experiencing severe difficulties securing essential export trade finance, even though the worst of the downturn has passed. In a joint survey with the Greater Manchester Chamber, the BCC surveyed over 250 exporting businesses. The survey found that one in eight businesses that used export trade finance had experienced problems securing it over the last year. Nearly half of firms who had faced problems said they had lost business to exporters from countries with state-backed export finance schemes.
 
David Frost, director general of the British Chambers of Commerce (BCC), said: “If the Government is serious about encouraging British exports as a driver of employment, economic growth and prosperity, it must resolve blockages in the finance that underpins UK global trade. Our exporters need to be able to compete more effectively with rivals on the Continent and further afield, who are currently better supported during difficult economic environments or in riskier foreign markets.”
 

Ian McCafferty, CBI chief economic adviser





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