UK manufacturers see sharpest output fall since 2020: CBI

Firms anticipate that price pressures will continue to ease going forward, with expectations for selling price inflation over the next three months at their softest since February 2021, according to the CBI’s latest Industrial Trends Survey.

Output volumes fell in the three months to August—weighted balance of -19 per cent, from 3 per cent in the three months to July, marking the sharpest decline since September 2020. Output is expected to be broadly stable in the three months to November at -3 per cent.

Total order books were reported as below ‘normal’ in August and to a greater extent than in July, -15 per cent from -9 per cent. However, this outturn was broadly in line with the long-run average at -13 per cent. Export order books were seen as below ‘normal’, having deteriorated from last month at -18 per cent from -11 per cent. This was also on a par with the long-run average at -18 per cent.

Expectations for average selling price inflation were at their softest since February 2021 at 8 per cent, from 18 per cent in July; long-run average of 7 per cent. Expectations for selling price inflation have eased for eight consecutive months, having fallen sharply from the multi-decade high seen in 2022—80 per cent in March 2022.

Stocks of finished goods were seen as more than ‘adequate’ in August—7 per cent from 0 per cent in July; long-run average of 12 per cent.

The survey was based on the responses of 277 manufacturing firms in the country.

Martin Sartorius, CBI principal economist, said: “With output volumes contracting at their fastest pace since the COVID-19 pandemic and order books deteriorating, this survey makes for gloomy reading for manufacturers. However, easing price pressures will bring some relief to many manufacturing firms and the broader economy.

“The weak outlook for manufacturing activity underlines the need to double-down on delivering sustainable growth. With fierce levels of international competition, the race is on for the UK Government to offer targeted incentives to attract green investment and support firms’ decarbonisation efforts.”

ALCHEMPro News Desk (NB)