- Howard Archer, chief UK economist at IHS Global Insight
The UK manufacturing sector growth stalled for the first time in more than two years, with a stronger Pound and weak exports weighing on the sector's margins and volumes. The monthly total order book balance from the CBI's industrial trends survey decreased to -7 in September, compared with -1 in August. The CBI said the slowdown in China and the ongoing lacklustre growth in the Euro zone, the top destination for the UK-made goods, had forced companies to freeze production. Hence, expectations for output over the next three months were the weakest since October 2013. According to the latest official data, British manufacturing continued to face headwinds and suffered a weak performance in July as output in the sector dropped 0.8% month-on-month, compared with growth of 0.2% in June.
Slower factory output, combined with volatile exports and weaker retail sales over the summer period suggested a slowdown in the third-quarter GDP in the UK. Given the latest run of mixed fundamentals, the Bank of England consequently revised down its outlook for growth in the second half of this year.
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