Fresh evidence of an easing in Britain’s growth rate was highlighted by the CBI when it said manufacturers were expending production at their slowest rate in more than two years.
The quarterly snapshot of industry from the employers’ organisation, ahead of first quarter GDP figures on Tuesday, reported that firms were less upbeat than they were at the turn of the year and were mothballing investment plans.
Businesses said the weakness of export orders was holding back factory output, according to the survey. This followed a first quarter of 2015 that had seen a slowdown in activity in the world’s two biggest economies – the US and China – and renewed concerns about the situation in Greece.
Just over a fifth (22%) of the 468 firms surveyed said they had increased production over the past three months while 17% said they had reduced output. The rounded gap between the two figures of four percentage points was the lowest since January 2013, when the economy was just starting to pick up momentum after two flat years.
Growth in order books has eased back over the past three months, the CBI said. Manufacturers are still hiring but at the slowest pace since January 2013.
Katja Hall, the CBI’s deputy director general, said: “It’s encouraging that our manufacturers are seeing – and expect to see – continued growth, with rates of expansion still above average.
“Exports keep dragging at the heels of growth: firms are finding the recent rise in the pound against the euro challenging, making them less competitive in Europe, while the unravelling situation in Greece is creating uncertainty.
“Among the measures business wants in the first 100 days of a new government, an ambitious, long-term export strategy must be a central element to keep growth on course.”
The industrial trends survey found there was an across-the-board deterioration in investment intentions, with industry less likely to spend money on buildings, new plant and machinery, product innovation, and training.
In January, the balance of manufacturers expressing optimism about where the business climate stood was +15 points, but the CBI said this had now fallen to +3 points, again the lowest since January 2013.
