Manufacturers more miserable

Just when we thought things for the manufacturing sector were beginning to look up, new figures have suggested that its fortunes are on the wane. According to the ‘industrial trends’ survey by the CBI, in September, manufacturers said they were expecting output to fall over the next few months, with the balance of firms which are optimistic over their prospects falling by 20 points, from +9 to -11 (anything below 0 suggests more manufacturers are expecting orders to drop than to increase). And, because no economic story these days is complete without a superlative, here it is: that’s the biggest fall since the survey began, back in 1975. Time to start worrying?

As any good student of the Coalition Government will know, it’s depending heavily on manufacturers to get economic growth back on track. In fact, it was only last month that the Chancellor was explaining how much he wants the UK to get its own version of the Mittelstand, the core of medium-sized manufacturing that forms the backbone of the German economy.

And, until recently, things were looking encouraging: in August, the same survey showed that a third of firms had received ‘above normal’ numbers of orders. But that growth in the sector seems to have come to an abrupt halt: according to September’s figures, general business sentiment plummeted, falling from (an admittedly none too healthy) -16% in July to -30% in October.

Sentiment over exporting, another of the Government’s growth-boosting priorities, is also in a rather sorry state: the CBI’s index for export optimism fell to its lowest level since April 2009. That’s partly, said the CBI, because of a lack of available export credit: 18% said they hadn’t been able to access finance at all. Considering the Government promised in February to extend its Export Credit Guarantee scheme, that’s rather alarming.

Even more worryingly, the CBI added that, as consumers and businesses alike rein in their spending in anticipation of another downturn, access to export credit is only going to get worse over the next few months. So much for the Government’s plans, then…