UK manufacturing output growth, price inflation to slow: CBI

The survey, based on the response of 212 manufacturers, found that manufacturing output growth slowed slightly in the three months to June (balance of +25 per cent, from +30 per cent in May). Growth is expected to ease further in the three months ahead, but expectations remain well above their long-run average (+20 per cent; average is +9 per cent).

Total order books were seen as above normal to a lesser extent than last month (+18 per cent from +26 per cent in May), while the volume of export order books fell back to a normal level (+1 per cent from +19 per cent in May).

Stocks of finished goods were seen as adequate in June, after being reported as inadequate in all but one month during the previous 13 months (+2 per cent from -15 per cent in May). Expected domestic price growth for the three months ahead eased markedly in June (+58 per cent, from +75 per cent in May and a survey record of +80 per cent in March). This was the weakest expectations for selling price inflation since September 2021, the survey found.

Anna Leach, CBI deputy chief economist, said: “While manufacturing output is still being supported by a backlog of orders, growth appears to be softening. Stocks of finished goods are now seen as broadly adequate, and we may be seeing the first signs that weaker activity is beginning to slow the pace of price increases in the sector. Manufacturers continue to report a range of challenges, including significant cost pressures, shipping delays, shortages of key inputs, and, not least, recruitment difficulties. Skills shortages remain widespread and are a key constraint on growth. All of these trends are weighing on confidence.

“Companies are pursuing a range of strategies to cope with these operational difficulties, but they can only do so much, and government must act now to prevent a deeper and more prolonged slowdown. Creating a permanent investment incentive and tackling skills shortages by introducing immediate flexibility to the apprenticeship levy would be strong first steps for boosting confidence.”

ALCHEMPro News Desk (KD)