Macro Matters

UK manufacturing orders gauge hits record high in September: CBI

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A worker in a protective suit sweeps the floor inside the Envision battery manufacturing plant at Nissan's Sunderland factory, Britain, July 1, 2021. REUTERS/Phil Noble

LONDON, Sept 21 (Reuters) - A record share of British manufacturers reported rising new orders this month but global supply chain problems and labour shortages held back growth in output, a survey showed on Tuesday.

The Confederation of British Industry's monthly manufacturing order book balance rose to +22 in September from +18 in August, its highest level since records started in 1977.

Still, the picture was weaker for export orders - which grew at their fastest since March 2019 - and the survey's gauge of output growth fell to its lowest level since April.

"Today's survey highlights how amidst a variety of supply challenges, companies are beginning to struggle to meet high demand," CBI deputy chief economist Anna Leach said.

"Despite close to half of manufacturers surveyed reporting order books above normal, output growth has slowed sharply, albeit remaining relatively robust."

The survey's gauge of price expectations cooled to a four-month low, but Leach warned manufacturers still faced rocketing energy prices.

As economies reopen after COVID-19 lockdowns, wholesale natural gas prices in Europe have soared this year, pushed up by high demand for liquefied natural gas in Asia, nuclear maintenance and lower-than-usual supplies from Russia.

The record prices have strained the British energy sector, destroying the business model of smaller energy traders and sending shockwaves through the chemical and fertiliser markets, leading to a shortage of carbon dioxide used in food processing.

Reporting by Andy Bruce, editing by David Milliken

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