UK’s manufacturing loses steam, throws fresh doubts over BOE hawkish outlook

Bank of England (BOE) officials have remained positive over UK's economy, however survey by conference board saying otherwise.

According to CBI, manufacturing growth has stalled due to weakness in both domestic and foreign front.

According to latest survey from conference board,

• Production declined for three months to October, for first time in two years.
• New export orders declined at fastest pace in three years and total new domestic orders for three months to October, declined for first time since April, 2013.
• Blames are on weakness from China, stronger Pound.

Key highlights -

• 22% of firms reported that orders grew in the three months to October, while 30% said it decreased giving a rounded balance of -8%, lowest since October 2012.
• 20% of businesses reported increase in domestic orders, with 31% reported a decrease. The balance for domestic orders (-11%), lowest since April 2013.
• 15% reported an increase in export orders, with 33% reported decrease.
• According to firms, competitiveness dropped at fastest pace since 2007.
• Optimism about the business situation decreased (-12%) and sentiment about export prospects for the year ahead also fell (-14%), the lowest since October 2012 (-12% and -19%).
• 18% of manufacturers reported that the level of their order books was above normal, while 25% said it was below normal giving a balance of -7%. That is above the long-run average of -15% but much lower than -1% in August
• 7% of firms said their export order books were above average, while 31% said they were below, giving a balance of -24% compared to -8% in August.

If Bank of England (BOE) maintains its current stance of hiking rates next year and European Central Bank (ECB) prepares another round of QE, stronger pound will further erode competitiveness of UK manufacturers.

Pound is currently trading at 1.534 against Dollar.