The latest quarterly survey from the British Chambers of Commerce (BCC) has found that the balance of manufacturers reporting increased export orders is the lowest in a decade, while domestic sales have slowed to their lowest rate since 2011.
Based on the responses of 6,600 UK firms, the BCC’s survey showed that the impact of a decline in exports and domestic sales had led to far fewer manufacturers reporting improved cashflow.
As the Government attempts to bash out a withdrawal deal with the EU, the uncertainty of Brexit seems to be having a significant impact on UK businesses, which is being made worse by a general slowdown in the global economy. As well as a decline in sales, those surveyed also saw domestic orders enter negative territory for the first time in seven years.
As a result of this, the number of firms in the manufacturing sector that increased investment in training dipped to its lowest level since Q1 2010, while indicators business confidence in turnover and profitability among manufacturers dropped to an eight-year low.
The service sector hasn’t fared much better, seeing a decrease in the balance of firms reporting increased domestic sales and orders, and export orders. However, this dip is not as significant as the manufacturing sectors.
Unlike the manufacturing sector though, this sector saw cashflow hold steady, although it still “remains low by historical standards”.
Suren Thiru, Head of Economics at the British Chambers of Commerce (BCC), said:
“Our findings point to a worrying drop-off in UK economic activity, with unrelenting uncertainty over Brexit and a notable slowing in global growth prospects dragging down almost all the key indicators in the quarter.
“The manufacturing sector continues to toil under the weight of diminishing cashflow, weakening global demand and disrupted supply chains, and the data indicates that the sector was a drag on UK GDP growth in the quarter. Although the slowdown in a number of the key service sector indicators was relatively modest, slowing activity in the sector is a concern given its dominant share of overall UK economic output.
“A stuttering services sector coupled with a worrying downturn in manufacturing activity indicates that any bounce back in UK GDP growth from the contraction in the second quarter is likely to be underwhelming at best. Looking forward, weakening orders, confidence and investment intentions suggest that unless action is taken the UK’s current weak growth trajectory could drift markedly lower over the near term.”