LONDON (Reuters) - British factory output slid to its weakest in more than two years in the three months to May, a survey showed on Tuesday, leaving the Bank of England waiting for signals that the economy has rebounded from a slow start to the year.
The Confederation of British Industry’s output gauge fell to +3 from April’s +13, its lowest level since April 2016 and below its long-run average for the first time since the June 2016 vote to leave the European Union.
Factories enjoyed strong growth in last year, helped by a rise in demand for exports after the 2016 Brexit vote caused a fall in the value of the pound.
But British manufacturing - which accounts for about 10 percent of economic output - has cooled this year along with the broader economy, which barely expanded in the first quarter.
“The (CBI) survey will hardly inspire confidence at the Bank of England that the economy is bouncing back significantly,” said Howard Archer, chief economic adviser at the consultancy EY ITEM Club.
Nonetheless, earlier on Tuesday BoE Governor Mark Carney said he did expect Britain’s economy to recover from a weak start to the year when it was hit by heavy snowstorms, keeping the prospect of higher interest rates on the table.
While manufacturers expect output will improve over the next three months, the CBI’s gauge of order books slipped to -3 from +4 in April, its lowest level since November 2016.
That was worse than all forecasts in a Reuters poll of economists, which pointed to a reading of +2.
“UK manufacturing has lost some steam since the start of the year, on the back of a softening in both domestic and global growth,” said Anna Leach, the CBI’s head of economic intelligence.
Other surveys have also pointed to a slowdown in British manufacturing. Official data covering the first three months of the year show factory output has yet to expand in 2018.
The CBI surveyed 411 manufacturing companies between April 25 and May 11.
Reporting by Andy Bruce and William Schomberg, editing by Larry King