[LONDON] Britain's main manufacturing lobby has halved its forecast for growth this year after overseas orders fell to their lowest since the financial crisis, while recruiters said skills shortages were leading to higher wages but slower job growth.
British manufacturing expanded 3.1 per cent last year, its best performance since 2010, but the EEF manufacturers'organisation said on Monday that it expected growth to slow this year to just 0.7 per cent, down from an earlier forecast of 1.5 per cent. "While UK data has continued to point to solid growth, UK manufacturing is having to contend with a roller-coaster of risks from the rest of the world, and the white-knuckle ride is starting to take its toll," EEF chief economist Lee Hopley said.
Uncertainty about the scale of an economic slowdown in China have caused share prices there to tumble in recent weeks, and both the United States and China have reported the slowest manufacturing activity in more than two years.
The EEF said the proportion of British manufacturers reporting growth was the lowest since late 2009, and that new export orders had edged down to a six-year low, a weaker picture than a similar survey had shown last week.
But for central bank policymakers in Britain and the United States, who are considering when to start to raise interest rates, the broader picture is mixed. Domestic conditions are strong, and tight labour market is starting to push up wages.
A survey by the Recruitment and Employment Confederation, which represents staffing agencies, said the number of people its members had placed in permanent jobs had risen by the smallest amount in more than two years.
"Although demand for staff remained strong, placements had in many cases been held back by a lack of skilled candidates," it said, adding that the number of people looking for work had fallen by the largest amount in a year.
Pay rose faster than average after growing at its slowest pace in 18 months in July.
The latest official data showed British wages excluding bonuses rose by 2.8 per cent in the second quarter of the year, the biggest annual real-terms rise since mid-2007, while total employment edged down from the first quarter's record high.