Manufacturing output
stabilised in the three months to August, following a drop in July, according
to the latest monthly CBI Industrial Trends Survey.
The survey of 286
manufacturing firms revealed that both total order books and export order books
were reported as below normal, but to a lesser extent than in July.
Output volumes
expanded in 7 of 17 sub-sectors in the quarter to August, with the chemicals,
mechanical engineering and plastic products sub-sectors driving the positive
contributions to growth. Meanwhile, the paper, printing and media sub-sector
acted as the primary drag on growth. Respondents expect output volumes to
remain unchanged over the next three months.
Manufacturers expect
to keep output prices in the next three months broadly unchanged - the lowest
balance since February 2016. Present stocks of finished goods were reported as
above adequate, but were roughly in line with the long-run average.
Anna Leach, CBI
Deputy Chief Economist, said: “Despite signs of stabilisation in the data this
month, UK manufactures remain on the receiving end of a double whammy: the
slowdown in the global economy and Brexit uncertainty. Trade tensions between
nations such as China and the US only exacerbate the demand uncertainty facing
UK manufacturers.
“As we get closer to
October, it’s crucial that the new Prime Minister secures a Brexit deal ahead
of that deadline and gets on with pressing domestic priorities, from improving
our infrastructure to fixing the apprenticeship levy.”
Tom Crotty, Group
Director of INEOS and Chair of CBI Manufacturing Council, said: “Relentless
Brexit uncertainty has continued to be a millstone around the neck of
manufacturing firms as we approach the end of the summer.
“It’s vital that the
Government lifts this burden by ending the Brexit deadlock. Only then can our
manufacturers turn their full attention to long-standing issues affecting the
sector, such as solving the skills challenge and improving productivity.”
Meanwhile, official
data showed that the economy contracted slightly in the second quarter of the
year, as the drive to build stocks ahead of the spring Brexit deadline unwound
and car companies adjusted their annual factory shutdowns. Early indications of
growth for the third quarter are subdued, with underlying momentum weak. At the
same time, global growth is expected to slow as trade tensions continue to
erode world trade flows. For more information, see our July Economic
Forecast.
Key findings:
- 15% of manufacturers reported
total order books to be above normal, and 28% said they were below normal,
giving a balance of -13% (from -34% in July). This month’s figure is line
with the long-run average (-13%)
- 11% of firms said their
export order books were above normal, and 26% said they were below normal,
giving a balance of -15% (from -32% in July) – broadly in line with the
long-run average of -17%
- 24% of businesses said the
volume of output over the past three months was up, and 27% said it was
down, giving a balance of -3% (from -11% in July, long-run average of +4%)
- Manufacturers expect output
to remain broadly unchanged in the coming quarter, with 24% predicting
growth, and 25% a decline, giving a balance of -1%
- Expectations for growth in
average selling prices for the coming three months (-2%) were at their
lowest balance since February 2016
- 18% of firms said their
present stocks of finished goods were more than adequate, whilst 4% said
they were less than adequate, giving a balance of +14% – roughly in line
with the long-run average (+13%).
