The CBI said its monthly survey of manufacturers revealed a slowdown in orders driven by the food and drink sector

This article is more than 2 years old

This article is more than 2 years old

British factory orders grew in September at their weakest rate since April as rising import costs and uncertainty surrounding Brexit negotiations dented business confidence.

The CBI said its monthly survey of manufacturers revealed a slowdown in orders that dragged back its measure for new contracts to +7 from +13 in August.

The sector also suffered a slowdown in output growth over the past three months driven by the food and drink sector, which is among the industries suffering the most from rising import prices.

CBI economist Anna Leach said the sector was still in rude health and likely to continue growing at above the historic trend for some time.

“Manufacturers continue to report solid growth in output, while total order books and export order books are holding firm,” she said.

“Expectations for selling prices were largely in line with the previous month, but price pressures do appear to have moderated somewhat since earlier in the year.”

Britain’s economy has slowed this year as the effect of a weaker pound pushed up inflation and weakened consumer demand.



The Bank of England has nevertheless said it is likely to raise interest rates at its next meeting on 2 November in the expectation that full employment will raise wage rates and keep inflation above its 2% target next year.

Bank chiefs have forecast that stronger exports will help offset weaker business investment and uncertain consumer demand.

The CBI survey painted a rosier picture of manufacturing output this year than gloomy official figures from the Office for National Statistics, which have shown the sector contracting for most of the first half.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: “The CBI’s total orders balance fell to its lowest level since April, but it still is consistent on past form with year-over-year growth in manufacturing output of about 4%.

“We doubt that manufacturing is growing that quickly – the relationship between the survey and official data has been poor lately – but it’s clear that the sector is is enjoying a rare good spell.”

The closely watched Markit/Cips UK manufacturing PMI barometer of factory sentiment showed activity jumped to 56.9 last month from 55.3 in July, the second-highest level in more than three years, helped by the weak value of the pound.