The UK manufacturing industry is experiencing its first decline in two years, according to the CBI Quarterly Industrial Trends Survey.
Despite this, the 463 manufacturers surveyed predict that overall manufacturing conditions will stabilise in the next three months, with a small rise in output, although new export orders are expected to edge down slightly further.
Firms highlighted concerns about political and economic conditions abroad and their impact on export orders, with worries about price competition rising and the number of manufacturers citing uncertainty about demand as a constraint on investment at its highest in two years.
Rain Newton-Smith, CBI Director of Economics, said: “Manufacturers have been struggling with weak export demand for several months, because of the strength of the pound and subdued global growth. But now they’re also facing pressure back home as domestic demand is easing.
“While on balance firms expect orders to stabilise next quarter, it’s disappointing that firms are having to scale back their investment in innovation.
“Over the longer term, strong investment in innovation and skills is vital to boosting our performance in exports, enhancing our manufacturing growth and improving productivity. It’s crucial that Government acts decisively to protect spending in these areas as part of the upcoming Comprehensive Spending Review.”