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CBI describes a ‘flat start’ to 2016


The UK economy has had a ‘flat start’ in 2016, according to the CBI’s latest Quarterly Industrial Trends Survey

Less than a quarter (23%) of businesses reported an increase in total new order books and 27% reported a decrease, giving a balance of -4%. While still negative this is an improvement from October, which saw a balance of -8%.

However, nearly one in five (18%) firms experienced an increase in export orders, with 20% citing a decrease. The resulting balance for export orders was -2%, much improved from October (-17%). Optimism about the business situation improved, but remained negative (-4%, compared with -12% in October).

Rain Newton-Smith, CBI director of economics, said that while there have been real problems in some industries in the last few months there are signs that orders and production are stabilising overall.

“Uncertainty around the prospects for global growth, noncompetitive energy costs, and the strength of the pound have all played their part in UK manufacturers finding conditions tough when trying to sell overseas,” she said. “Over the longer term, strong investment in innovation and skills is vital to boosting our performance in exports, so it’s great to see firms planning to invest more in training and products over the next year.”

Doug Monro, co-founder of Adzuna, said times are getting tougher for the manufacturing sector. “The strong pound is dampening orders from abroad, but the pound’s recent fall against the US dollar and euro mean exports to the US & Europe have promise,” he said. “Closures continue to be common and overseas competition is making its mark. The uncertainty of the upcoming EU referendum is also having an impact. A quick resolution would be beneficial to stabilise industry confidence. Financial prospects are similarly dipping."

He added: “Manufacturing workers saw a 2.9% decline in average advertised annual salaries in November to reach £29,582 – placing them in the lower section of UK earners. Despite this, the industry does have massive potential. Vacancies were up from last year to 19,091 in November.

“Britain’s manufacturing should be a priority. Production is the pulse of the UK’s jobs sector.”