UK manufacturers are in a bad way. Next week’s CBI survey is likely to say that companies are seeing falls in their order books and they expect output to fall in the next three months. One reason for this is that Brexit uncertainty, among other things, is depressing capital spending. But another is simply that external demand is still weak.
We’ll get confirmation of the latter fact from purchasing managers’ surveys on Friday. These are likely to show that the services sector is growing only slowly and that manufacturing is shrinking.
There might, though, be a glimmer of hope here as the survey could show that the latter is starting to stabilise. This would be consistent with the recent pick-up in narrow money growth – which has traditionally been a lead indicator of activity – and with European Central Bank forecasts, which are for the economy to growth moderately next year.