July 2019
British Chambers of Commerce survey points to manufacturing slowdown: A major survey of over 6,800 UK businesses has found UK manufacturing growth is at its lowest level in years.
The British Chambers of Commerce polled more than 6,800 firms between 20 May and 10 June 2019 and found the number of firms reporting improved domestic orders was at its lowest rate for seven years – following two previous quarterly falls.
It also found that although there had been a 'modest pick-up' in the services sector with an increase in the number of companies reporting higher sales and orders domestically, the activity in Q2 was not great enough to offset the significant drops experienced in Q1.
The research also found that number of service firms and manufacturers expecting prices to rise has fallen to its lowest level since 2016. The majority of those polled said they anticipated no change in their prices. And although a number of firms reported improved cash flow this quarter, it is still low when analysed against historic standards.
Manufacturing sector findings:
Looking at domestic sales, 10% of manufacturers reported improved domestic sales in Q2 2019 a drop from 15% in Q1. In terms of export sales 10% of manufacturers experienced improved sales figures, compared to 14% in Q1.
The number of manufacturers who reported improved export orders were down from 10% in 2019 Q1 to 4% in Q2.
Looking to the next twelve months, 28% of manufacturers are expecting their prices will increase, which is a significant drop since Q1 when it was 42%. The number of manufacturers reporting increased investment remains unchanged since Q1 at 14%.
The survey also revealed that 38% of manufacturers are confident that their turnover will grow in the next year, compared to just over a quarter (26%) in 2019.
Looking at the reasons why companies are facing pressures to rise prices, three-quarters (75%) said raw materials were a key factor, while 35% reported pay settlements, and 16% said financial costs. Other overheads were cited as the reason 44% of manufacturers were feeling pressure to raise prices.
BCC director-general Adam Marshall said: “Over the last three months, the Brexit ‘pressure valve’ has loosened a little for some firms, but the overall picture is still one of an economy in stasis. Many businesses and investors will continue to put off major decisions through the summer, hoping for a breakthrough in the Westminster impasse before the Brexit deadline on October 31st."
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