LONDON, Dec. 4 (Xinhua) -- British manufacturing is defying forecasters' downgrades of overall economic growth and shrugging off the uncertainty around Brexit to be the "standout" sector of the economy, an expert said on Monday.
"It's all very positive, it is a standout given what we see in the rest of the economy and manufacturing is moving in a positive trajectory," Lee Hopley, chief economist with manufacturing representative body EEF told Xinhua on Monday.
According to the EEF/BDO Manufacturing Outlook Q4 survey, manufacturers are shrugging off the political uncertainty in Britain as improved world demand, from European markets in particular, and the increase in commodity prices is feeding growth across the manufacturing supply chain.
This is compensating for somewhat weaker domestic demand as the squeeze on living standards and Brexit uncertainty continues to weigh on growth, with inflation currently outstripping wages growth by about 1 percent.
This strong performance, across all sectors and regions, has led EEF to upgrade growth forecasts for manufacturing for this year and next, meaning the sector will outperform the economy overall.
Both output and total orders remained in very positive territory in Q4 at plus 34 percent (plus 34 percent in Q3) and plus 30 percent (37 percent in Q3) respectively.
Looking forward, while the balances are expected to ease further from those seen this year, some of which have been historic highs, they are expected to remain healthy, EEF said in a statement.
The EEF forecasts for sector growth are 2.1 percent this year and 1.4 percent for next year. EEF forecasts, somewhat more optimistic but in line with Office of Budget Responsibility (OBR, the official data watchdog) growth of 1.5 percent in 2017 and 1.3 percent next year.
Hopley said buoyant global conditions were a major boost: "A lot of that (growth) is attributable to what his happening in the rest of the world with stronger global growth this year and next.
She added: "Also, weaker sterling is helping companies and there is a very strong export dimension to the numbers and the views we have uncovered in the survey."
Sterling has fallen from 1.48 U.S. dollars at the time of the Brexit referendum in June 2016 to 1.35 U.S. dollars now.
"Sterling's fall is a stimulant for some manufacturers but there are challenges for domestic firms from the increased cost of components and raw materials; it is a benefit but not for everyone," said Hopley.
A shift in the way British firms build their supply chains, with a greater focus on domestic supply chains rather than trans-border ones, may be under way in response to the trading uncertainties raised by Brexit.