Manufacturing output
growth slowed in the quarter to February, while order books improved slightly,
according to the latest monthly CBI Industrial Trends Survey.
The survey of 366
manufacturers found that both total and export order books strengthened
modestly on the previous month, while remaining comfortably above their
respective long-run averages.
Output volume growth
slowed in the three months to February to a pace roughly in line with its
long-run average. Output expanded in over half (9 out of 17) of the
sub-sectors. Looking ahead, firms expect output volumes to grow at a broadly
similar pace over the next quarter.
Manufacturers
reported that stock adequacy picked up, but remained broadly in line with the
long-run average. Meanwhile, expectations for price inflation in the next three
months sped up to their quickest pace in a year.
UK manufacturers
continue to be supported by the lower level of sterling, although weaker global
economic momentum means less support for export orders from that front. But the
continued threat of a no-deal Brexit poses the biggest risk to the outlook for
UK manufacturers. For more detail, see our December economic forecast.
Anna
Leach, CBI Head of Economic Intelligence, said: “UK manufacturing activity has moderated at the same time as headwinds
from Brexit uncertainty and a weaker global trading environment have grown.
“The time for Brexit
compromise to support the UK manufacturing industry is now. The clock is
ticking quickly towards crisis point. It is of critical importance that
politicians of all stripes and on both sides of the channel come to agreement
on the terms of a Brexit deal as soon as possible, to allow our manufacturers
to continue to create, make and trade their goods with certainty.”
Tom
Crotty, Group Director of INEOS and Chair of CBI Manufacturing Council, said: “Manufacturers have proved highly resilient in the
difficult circumstances they find themselves in. However, it is without doubt
that Brexit uncertainty has been a millstone on growth and investment in the
sector.
“We are now just
weeks away from the very real prospect of a ‘no deal’ Brexit, which would be
hugely damaging to manufacturers up and down the country. The political
paralysis on Brexit must urgently give way to compromise and an acceptable deal
being struck.”
Key findings:
- 24% of manufacturers reported
total order books to be above normal, and 19% said they were below normal,
giving a rounded balance of +6%. This was comfortably above the long-run
average (-13%) and a modest improvement on January (-1%)
- 20% of firms said their
export order books were above normal, and 19% said they were below normal,
giving a balance of +1% – above the long-run average of -17% and slightly
stronger than January (-5%)
- 27% of businesses said the
volume of output over the past three months was up, and 20% said it was
down, giving a balance of +7%. This was a slower pace than the one
reported in January (+16%), and the weakest rate of growth since May 2018
(+3%) – but still above the historic average (+4%)
- Manufacturers expect output
to grow at a roughly similar pace in the coming quarter, with 30%
predicting growth, and 23% a decline, giving a rounded balance of +8%
- Expectations for growth in
average selling prices for the coming three months (+22%) were the highest
for a year (February 2018: +25%), and significantly above the long-run
average (+3%)
- 19% of firms said their
present stocks of finished goods were more than adequate, whilst 9% said
they were less than adequate, giving a balance of +10% – roughly in line
with the long-run average (+13%) but the highest since May 2018 (12%).
