Home Business News UK trade volumes fall but manufacturers exporting rise

UK trade volumes fall but manufacturers exporting rise

by LLB Reporter
24th Oct 19 11:46 am

UK exports fell in Q3 amid a global slowdown in economic growth and rising international trade tensions, according to the latest Lloyds Bank International Trade Index, compiled in partnership with IHS Markit.

Despite the challenging environment, more than eight in 10 (81 per cent) manufacturers surveyed said they had exported between July and September, the second-highest percentage since 2005.

Manufacturers were helped by international supply chain efficiency hitting a 10-year high, as slowing global economic growth and the surplus inventory from stockpiling seen between January and March led to fewer bottlenecks and shorter delivery lead times from suppliers.

Nine out of the UK’s 10 largest trading partners posted economic growth in Q3, with the rate of growth in France and Italy increasing. However, slower growth in markets such as Germany, Ireland, the USA and China all contributed to a fall in manufacturing exports overall.

The International Trade Index posted a reading of 46.5 for new manufacturing export orders in Q3, down from 46.9 in the second quarter and the lowest since Q2 2012. A reading of above 50 indicates growth, while one below 50 signifies a decrease.

Meanwhile, the UK automotive industry posted its weakest quarter for new exports in a decade between July and September, with respondents citing a sharp fall in European production levels and a global shift in investment towards electric vehicles.

The fall in manufacturing exports was partly offset by increased overseas sales of chemicals, including pharmaceuticals, and luxury and sporting goods.

Gwynne Master, managing director and global head of trade for Lloyds Bank Global Transaction Banking, said, “Our analysis underlines how the fortunes of UK exporters are affected by a complex range of factors extending well beyond our borders.

“A slowdown in global economic growth and trade tensions are undoubtably making the environment for exporters challenging. There are, however, bright spots and it’s incredibly encouraging to see such a high number of UK manufacturers continuing to take advantage of new opportunities, pockets of international growth, and greater supply chain efficiency.“With a shifting outlook for exporters we see firms revising strategies that support their individual overseas trade objectives. Help can come in the form of financial solutions that mitigate the risk of trading in new markets, enhance working capital, or tools that enable exporters to better understand the best market for their products or services.”

Financial services stabilise UK services exports

According to IHS Markit data, new overseas sales of services fell for the fourth consecutive quarter in Q3, but at a slower rate than in Q1 and Q2 2019.

The UK services index posted a reading of 49.6, up one point on the second quarter of this year but still slightly below the 50 mark that signals growth.

The uptick was driven by UK financial services, which rebounded after four consecutive quarters of decline to become the only services subsector to register export growth in Q3.

Financial services’ growth offset a fall in transport and communication services exports, which had previously grown during Q2 due to EU stockpiling.

Master added, Our findings for transport and communications services firms show how fluctuating levels of inventory build-up in Europe and UK have impacted UK companies.

Between April and June, it looked as though UK firms were dialling back efforts to stockpile. In Q3, this has reversed, with PMI data showing higher inventory levels. While the reasons for building up inventory in this way are several, it has an inevitable negative impact on working capital.

“Working closely with businesses to manage their working capital is a key component of our commitment to helping Britain prosper. By mitigating risk and managing working capital effectively, UK exporters can ensure they have the security and liquidity to navigate a fast-moving international trading landscape and take advantage of new opportunities at home and abroad.”

Leave a Comment

You may also like


Sign up to our daily news alerts

[ms-form id=1]