UK manufacturers gloomy but consumers more upbeat
Optimism among UK manufacturers has fallen rapidly but British consumers have become more positive, two surveys showed today, in the latest sign of a big divide in the economy.
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Business optimism among small and medium-sized (SME) UK manufacturers fell at its fastest pace in three years in the three months to July, according to a CBI survey.
But Britons’ views of their own personal economic situation improved significantly in July, to the same level they were at a year ago, a survey by research institute GFK showed.
Consumer spending has helped keep the UK economy on its feet in 2019 as trade and business investment have suffered under political uncertainty and a global slowdown.
Manufacturing has been badly hit, with British factories recording their lowest level of output since February 2013 in June according to a survey from data company IHS Markit earlier this month.
Today’s CBI survey, which spoke to 268 SME manufacturers, showed optimism about exports fell to its lowest level since the financial crisis.
Both domestic and export orders fell at the quickest rate since 2013 and 2015 respectively.
“Against the backdrop of slower global growth and continued Brexit uncertainty, optimism among SME manufacturers is waning,” said CBI principal economist Alpesh Paleja.
Yet consumers were much less fazed by Brexit. Gfk’s gauge of people’s personal financial situation over the next 12 months rose five points to a score of seven, the same as it was a year ago.
The gauge of whether people are looking to make major purchases rose by six points to a score of four, compared to minus two a year earlier.
Joe Staton, client strategy director at GfK, said: “We can report a boost in attitudes to our personal financial situation in the face of low interest rates and day-to-day inflation.”
“Consumers have generally been less affected by Brexit uncertainties than business since the referendum,” he said.
“The coming months to 31 October departure date will test the strength of this confidence. Will consumers greet the Halloween Brexit deadline with hurrahs or howls?”
Read more: UK manufacturing records worst month in six years
The CBI’s Paleja said: “Securing a Brexit deal ahead of the October deadline remains a top priority for smaller manufacturers. Firms will also be looking for early signs of how domestic priorities – from fixing the apprenticeship levy to improving infrastructure – will be delivered.”