UK manufacturing continued on the long road to recovery in 2015 Q1, but growth slowed due to poor export figures and concerns over output.

The CBI Quarterly Industrial Trends Survey is based on a poll of 468 manufacturing firms. It suggests 37% of businesses saw an increase in new order books in the previous quarter. This is compared to 24% that saw a decrease – leading to a balance of +13%.

This was largely driven by strong growth in domestic orders. This saw a balance of +12%. By contract, the balance of growth for export orders was only +4%.

One of the main reasons for this is a perceived weakening of UK manufacturers’ position within the EU. Respondents said UK firms’ position is now worse than in any point since April 2000.

Subsequently predictions for the export prospects across the coming 12 months have dipped sharply. The balance for optimism about export growth is now at -9%. 

The number of people employed in the manufacturing sector, one of the plus points for the industry, is also showing signs of slowing.

In the first quarter of 2015 the growth slowed to its lowest rate for two years. It is predicted to flat-line in this quarter.

Another area for concern is the level of investment in the manufacturing industry. In buildings the intentions showed a balance of -19% (down from -5%) and in plant and machinery it fell from +16% to -6%.

CBI deputy-director general Katja Hall said that, despite some concerns over export, it is “encouraging that our manufacturers are seeing continued growth”.

“Exports keep dragging at the heels of growth: firms are finding the recent rise in the Pound against the Euro challenging, making them less competitive in Europe, while the unravelling situation in Greece is creating uncertainty,” she continued.

“Among the measures business wants in the first 100 days of a new government, an ambitious, long-term export strategy must be a central element to keep growth on course.”

Further reading on growth: Mind the SME funding gap