Growth in UK exports slows

Growth among UK exporters slowed during the last quarter of 2011, according to the third DHL/BCC Trade Confidence Index, a measure of the UK’s exporting health.

The index, which draws upon a survey of over a thousand exporters and an analysis of export documentation, required of all UK companies exporting goods outside the EU, shows a muted outlook for domestic and international trade activity in 2012.

Trade documentation data for UK goods exports in Q4 2011 shows a 3.7 percent increase on the same quarter last year, demonstrating that growth in export goods continued. Additionally, a third (34 percent) of respondents stated that their export orders increased in Q4, comparable to 35 percent in Q2 and Q3 respectively.

Manufacturing 

Despite worsening confidence about the general business situation amid concerns over the slowdown in the world economy, the balance of UK manufacturing firms reporting an increase in their domestic orders saw a marginal swing from -2 percent in Q3 to +2 percent in Q4. Furthermore, the balance of manufacturing firms reporting an increase of profitability confidence rose from +32 percent to +36 percent .

Export orders 

However, overall the survey results also show that firms recorded weaker export orders than export sales, suggesting a slowing of export growth towards the end of the year. A quarter of exporters (25 percent ) saw a decrease in export orders over the last quarter, compared to 24 percent in Q3, 22 percent in Q2, and 12 percent in Q1.

With slowing export orders and sales, many exporters feel less confident in increasing revenue and profitability, and are therefore delaying decisions to invest and take on more staff, the report suggests.

Meanwhile, inflation remains a huge concern for exporting businesses, but there are signs that some of these pressures are easing.
The cost of energy, fuel, and raw materials has contributed to financial pressures on businesses and consumers alike.
For manufacturers, the proportion of firms reporting inflation as a concern fell from 42 percent to 40 percent, and was a lesser concern than both taxation and exchange rates.

However, in the service sector, the proportion of firms reporting inflation as a concern was at its highest since Q1 2010.
Commenting on the results of the index, John Longworth, director general of the British Chambers of Commerce, said: “The Index shows that the increase in export orders seen after the recession continues, but the pace of this growth has slowed for the fourth quarter in a row.

“As problems in the eurozone rumble on, and sterling remains strong, our exporters are facing a challenging trading environment. Falling confidence means many exporters are delaying decisions to invest and take on staff, affecting the UK’s economic prospects and the move towards the ‘rebalancing’ we need to see.”

“Companies across the country are exporting innovative, best of British products and services, but we want to see thousands more take the plunge and start selling overseas.

“We need to create an exporting culture by helping our businesses take to new markets on trade missions, and other promotional activity.”