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Mood darkens for UK's smaller manufacturers, consumers stoic

Mood darkens for UK's smaller manufacturers, consumers stoic
FILE PHOTO: A British flag flutters over frigate HMS Westminster in Riga port, Latvia May 3, 2019. REUTERS/Ints Kalnins -
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Ints Kalnins(Reuters)
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LONDON (Reuters) – Optimism among smaller British manufacturers tumbled to a three-year low in July, hit by a slowing global economy and the Brexit crisis at home, although consumers remain relatively upbeat, surveys on Wednesday showed.

The Confederation of British Industry’s (CBI) gauge of optimism among small- and medium-sized (SME) manufacturers fell to -28 from -12 in April, its lowest level since July 2016, just after Britain voted to leave the European Union.

A separate indicator of consumer confidence from market research company GfK rose unexpectedly in July to -11 from -13 in June, beating all forecasts in a Reuters poll of economists but broadly in line with its range this year.

Overall, the two figures chimed with other data that show deep pessimism in British businesses about the outlook but resilience among consumers.

Both surveys were conducted before Boris Johnson won the contest to become British prime minister on July 23 with a promise to leave the European Union on Oct. 31, with or without a deal.

“With orders falling and output and headcount stalling, the new Prime Minister must restore confidence and set out a pro-enterprise path that supports SME manufacturers,” CBI economist Alpesh Paleja said.

“Securing a Brexit deal ahead of the October deadline remains a top priority for smaller manufacturers.”

Firms’ optimism about export orders over the coming year was the lowest since April 2009, during the depths of the financial crisis, while domestic orders dropped at the fastest pace since April 2013 during the three months to July, the CBI said.

The GfK survey of just over 2,000 people, conducted for the European Commission, showed they were mostly upbeat about their personal financial prospects in the coming year, helped by wages rising at the fastest pace since the financial crisis.

“Consumers have generally been less affected by Brexit uncertainties than business since the referendum. However, the coming months to the October 31 departure date will test the strength of this confidence,” GfK executive Joe Staton said.

A separate British Retail Consortium survey showed shop prices declined in July by 0.1% year-on-year for the second month running.

(Reporting by Andy Bruce, editing by David Milliken)

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