Manufacturing boost fails to lift UK growth
Based on the responses of over 7,100 businesses, the survey shows that despite improvements in the manufacturing sector, the UK economy grew at a muted rate in the third quarter of 2017.
In the manufacturing sector, the proportion of firms reporting improved domestic sales and orders both rose in the quarter to their highest level since Q1 2015.
Export sales and orders also improved, as stronger recent economic growth in a number of key markets has helped support demand for UK products.
However, in the services sector, traditionally the main driver of UK economic growth, domestic sales and orders remained static in Q3, as did the sector’s employment expectations, investment in training, and confidence in profitability and turnover.
Almost all services indicators remain below their pre-EU referendum levels, with consumer-focused businesses reporting weaker growth rates compared to B2B firms.
The results of the survey also show the prevalence of recruitment difficulties facing UK businesses, which worsened further in Q3.
Almost three-quarters of manufacturers reported difficulties hiring staff, and in services, the percentage rose to its highest level since Q1 2016, and stands at three times the long-term average.
The muted results make clear the need for the upcoming Autumn Budget to provide a fillip to the economy – and begin to address some of the issues undermining the UK’s growth prospects, including skills gaps, high upfront costs and aging infrastructure.
With Brexit-related uncertainty growing, the Q3 QES demonstrates the need for action to support a competitive and enterprising business environment. ■