UK manufacturing output falls, but decline expected to slow: CBI

In June, expectations for average selling price inflation eased to 19 per cent from 26 per cent in May, though they remained above the long-run average of 7 per cent. Output volumes declined sharply in the three months to June, with a weighted balance of -23 per cent, slightly improving from -25 per cent in the previous quarter, as per CBI’s latest monthly Industrial Trends Survey (ITS).

Manufacturers expect a slower decline in output over the next three months, forecasting a balance of -5 per cent.

Output fell in 14 out of 17 sub-sectors, particularly in chemicals, metal products, and mechanical engineering. Total order books were reported as below normal at -33 per cent, down from -30 per cent in May and well below the long-run average of -14 per cent.

Export order books also remained below normal, with a balance of -26 per cent, largely unchanged from -29 per cent last month and beneath the long-run average of -18 per cent. Stocks of finished goods were considered more than adequate at 6 per cent, though this too fell below the long-run average of 12 per cent.

“The UK's manufacturing sector is under significant pressure, contending with high energy costs, rising labour costs, pervasive skills shortages, and a volatile global economic environment. With departmental budgets now set following the Spending Review, businesses are looking to the government to dismantle barriers to growth ahead of the Autumn Budget,” said Ben Jones, lead economist at CBI. “Welcome progress has been made with the recent infrastructure and industrial strategies setting a clear long-term economic vision for the UK. This is complemented by a US-UK trade deal expected to mitigate tariff uncertainty, especially for automotive and aerospace, and British Steel's agreement to provide 337,000 tonnes of rail track for network rail.”

“With long-term strategies presented, the government must now continue to back up its ambitions with short-term delivery. This includes rolling out welcome energy cost interventions as soon as possible; delivering on growth and skills levy flexibility; and pushing technology adoption to boost productivity,” added Jones. “Businesses are ready to work in partnership to translate long-term ambitions into near-term investments, job creation and opportunities.”

ALCHEMPro News Desk (SG)