Manufacturers Run Out of Steam

25th April 2018.

Factory order books struggled to make much ground in the three months to April in a sign that the revival in Britain’s manufacturing sector may be running out of steam.

Despite hopes of a boost as the country heads into Spring, activity within UK factories has been slower than expected. According to an industry survey from the Confederation of British Industry (CBI), growth within the sector slowed in the first three months of the year. While the cold snap last month hit construction and retail hardest, the brunt of the slowdown could be blamed on the bout of bad weather.

Growth may be sluggish, but the CBI insists that the sector is in “robust health”, helped by the cheaper pound. According to the survey, exports orders have grown and domestic demand has steadied. As domestic products regain popularity with international buyers, the confidence of workers has improved. In particular, workers’ confidence over the next year’s prospects has improved at an above-average pace. This confidence has been shaped by employers, with manufacturers expected to spend more on training and retraining over the last twelve months.

As the UK fast approaches the Brexit deadline next year, its reputation in the eyes of international rivals becomes more important. The boost in exports is encouraging, but business owners should focus on pursuing growth. At the Credit Protection Association, our debt recovery services free up cash flow, giving our members the financial freedom to explore new ways to advance their business. This could be through introducing new training programmes or new equipment to encourage workers’ productivity.

Samuel Tombs, at Pantheon Macroeconomics, said: “The CBI’s survey continues to suggest that the revival in the manufacturing sector has lost some momentum this year but remains strong by past standards. The total orders’ balance is a long way below last year’s November peak, but it is still well above its 40-year average -19.” The CBI’s survey of 356 manufacturers also revealed there had been a big increase in stocks to +12 percent, “suggesting that growth in output will cool over the coming months”, Mr Tombs said.

Factories are aiming to invest more in product and process innovation over the next year, while the balance of companies expecting to spend more on buildings rose to the highest in two years.

However, there was a sharp fall in confidence. Of the companies surveyed, 4 percent were less optimistic about the general business outlook. Exports confidence held steady, with 15 percent more optimistic than less.

While retail and construction sectors focus all resources on ensuring their survival, manufacturers can concentrate on growth. With the Brexit deadline fast approaching, Britain cannot afford to lag behind international rivals, and all ensuing advancements in technology, equipment and training must keep pace with the competition. Put simply, focussing on such elements as technology and equipment can drastically boost employees’ productivity, making the business more successful and with more space to grow.

At the Credit Protection Association, both our debt recovery and credit management products help a business to grow. Our collections team chase down the unpaid invoices, boosting cash flow in the process. In the meantime, our credit managers credit check suppliers and customers and utilise the CPA company directory to ensure our members are aware of exactly who they are doing business with. What is left is a business with the financial capability to expand, and the strong cash flow to maintain it.