Output is expected to rise moderately in the three months to May (7 per cent). Moreover, output fell in 11 out of 17 sectors in the three months to February, according to the latest Industrial Trends Survey by the CBI.
Total order books were reported as below ‘normal’ in February, to a similar extent as in January (-16 per cent from -17 per cent). This was broadly in line with the long-run average (-13 per cent). Export order books were also seen as below normal and to a greater extent than last month (-27 per cent from -22 per cent). This was below the long-run average (-18 per cent).
Expectations for average selling price inflation in the three months ahead were the lowest since May 2021 (40 per cent, from 41 per cent in January), having declined steadily from the multi-decade highs seen in early 2022 (80 per cent in March 2022). But they remained well above the long-run average (6 per cent).
Stocks of finished goods were seen as adequate in February, with the balance broadly similar to January (9 per cent from 12 per cent).
Anna Leach, CBI deputy chief economist, said: “Conditions in manufacturing remain challenging, with output disappointing and order books having thinned out since late last year. However, if growth is going to return to the sector on a sustainable basis, then manufacturers need more than the boost some will receive from lower energy prices over the winter season.
“The chancellor must use the upcoming budget to tackle one of the biggest threats to the future competitiveness of the sector. Following the Inflation Reduction Act in the US, manufacturers are worried about the relative competitiveness of operating from a UK base. They are calling on the government to deliver its own alternative to help drive a home-grown, secure, low-cost energy system and sector by significantly boosting incentives for green investment in the UK.”
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