UK Economic Recovery Solid but Sluggish on Strained Manufacturing

Britain's economic recovery has slowed down but, according to the Confederation of British Industry, growth is solid.

Data from the CBI's latest Growth Indicator survey of 749 businesses, slower growth across all sectors of the economy was mainly due to the weakest performer, manufacturing, following deteriorating export orders, is to blame for stagnant growth.

"The economy is continuing to grow at a slower, but nonetheless solid pace," said Rain Newton-Smith, CBI Director of Economics.

"This isn't surprising since we expected growth to tail off somewhat in the second half after a strong start to the year. Despite all the international headwinds, it's encouraging to see our surveys showing a steady expansion in the UK economy.

"Nonetheless, manufacturers in particular are feeling under pressure as export growth continues to disappoint. Faced with huge political and economic uncertainties, ranging from a weak Eurozone, a deteriorating outlook for emerging markets and an increasingly febrile geo-political climate, it's little wonder that firms have been gradually scaling back their predictions for growth."

CBI's resulting survey balance of +19% is above the long-run average, but slightly weaker than last month's survey balance of +23%.

The lobby group said that in the next quarter, businesses are predicting slightly stronger growth of +25%, similar to the pace expected in September (+27%).

The CBI data supports Office for National Statistics (ONS) figures that show Britain's economy recovery has eased off as the services output growth also slowed.

The UK economy only expanded by 0.7% between July and September, compared with 0.9% in the second quarter this year, amid the country's manufacturing sector expanding at the weakest pace in 18 months.

In the same period last year, the economy grew by 3%.

Factory output growth slumped by 0.4% in the third quarter of 2014, which accounts for the slowest rate of growth since the first three months of 2013.

It was the biggest annual fall since September 2009 and a bigger decrease than the 0.3% economists had expected.