A CBI growth indicator study has shown that while growth remains steady, momentum has slowed up. 748 companies from the manufacturing, retail and service sectors responded to the survey; it shows that as with other sectors the manufacturing industry is still affected by slow growth.
The survey also revealed that expectations for the next quarter remain weak, but on a more positive note they are still above average.
CBI Director of Economics Rain Newton-Smith stated:
“Growth in the economy is steady this month, but momentum is slower than in the first half of the year.
“Business and consumer services are stoking the economic fire, but while manufacturing has seen a modest improvement, firms in the sector are still expecting to see a fall in output.
Newton-Smith added that the major risks to our economy came from beyond the UK; this is due to vulnerabilities in emerging markets and the possibility of volatile global markets.
However, the PMI report from Markit showed an increase in exports for manufacturing in November, and while the sector continues to see moderate growth, it is the larger companies that are benefiting as opposed to the small and medium sized businesses.
Rob Dobson, who is the Senior Economist at Market, said:
“UK manufacturing is moving back into expansion mode during quarter four, as it starts to reverse the losses sustained in the prior quarter. Although the pace of growth so far is only very modest, it positions manufacturing as less of a drag on the broader economy.”
Manufacturing Advisory Service
The manufacturing sector was handed a blow on Friday, December 4th, when the government made the surprise announcement that it is to close the Manufacturing Advisory Service and the Growth Accelerator, which are all part of the government’s Business Growth Service.
As part of the advisory service, manufacturers could get advice to help grow their business if they were based in the UK and had a turnover of less than £40 million; it helped to support manufacturers in a vast range of industries including the oil and gas, pharmaceuticals, food and chemical sectors.
The decision to close the Business Growth Service was unexpected as it wasn’t announced as part of the spending review and some MPs, including Greg Mullholland, are calling for the decision to be reconsidered.
Commenting on the decision, Baroness Lorely Burt stated:
“The Manufacturing Advisory Service was a great asset to businesses, and an important part of the Industrial Strategy set up by Vince Cable.”