UK manufacturers face faster decline in output in 3 mths to Sept

Following eight consecutive months in which expectations for selling price inflation have eased, manufacturers reported that growth in selling prices would pick up again in the three months to December. However, barring last month’s survey, selling price expectations remain at their weakest since early 2021, according to the CBI’s latest Industrial Trends Survey.

The survey, based on the responses of 292 manufacturers, found that output volumes fell in the three months to September—weighted balance of -10 per cent, from -19 per cent in the three months to August. Output is expected to be unchanged in the three months to December.

Total order books were reported as below ‘normal’ in September to a broadly similar extent to August, -18 per cent from -15 per cent. This left the level of total order books below the long-run average at -13 per cent. Export order books were also seen as below ‘normal’, having also deteriorated from last month at -23 per cent, from -18 per cent. This brought them below the long-run average at -18 per cent.

Expectations for average selling price inflation rose marginally in the three months to September—14 per cent, from 8 per cent in the three months to August, ending a streak of eight consecutive months in which expectations had eased. Selling price expectations were comfortably below the multi-decade high seen in 2022—80 per cent in March 2022, but moved back above the long-run average at 7 per cent.

Stocks of finished goods were seen as more than ‘adequate’ in September, 10 per cent from 7 per cent in August with a long-run average of 12 per cent.

“Output in the manufacturing sector weakened over the past quarter and is expected to flatline at best through the rest of this year. With order books having been below their long-run average for 8 out of the last 9 months, manufacturers see little prospect of a recovery in the final months of the year,” said Anna Leach, CBI deputy chief economist.

ALCHEMPro News Desk (NB)