Manufacturing output
was flat in the three months to September, a slight improvement on August,
according to the latest monthly CBI Industrial Trends Survey.
The survey of 269
manufacturing firms revealed that both total order books and export order books
were reported as below normal, and to a much greater extent than in
August.
Output volumes
expanded in 9 of 17 sub-sectors in the quarter to September, with the food,
drink & tobacco and mechanical engineering sub-sectors driving the positive
contributions to growth.
Meanwhile, the main
drags on growth were the metal manufacture, metal products and textiles &
clothing sub-sectors. Respondents anticipate that output volumes will fall at a
brisk pace in the next three months.
Manufacturers expect
output price inflation in the next three months to accelerate above the
long-run average. This follows expectations of no change in August.
Present stocks of finished goods were reported as above adequate to the
greatest degree since the financial crisis (May 2009).
Anna Leach, CBI
Deputy Chief Economist, said: “Following a stabilisation in last month’s data,
UK manufacturers have become noticeably gloomier in September. This likely
reflects a combination of heightened Brexit uncertainty and the ongoing global
slowdown in manufacturing.
“With little more
than a month to go until 31 October, the message from business is clear. Both
sides need to get a deal by compromising to protect jobs and livelihoods on
both sides of the Channel.”
Tom Crotty, Group
Director of INEOS and Chair of CBI Manufacturing Council, said: “Given there is
still no Brexit resolution with just weeks to go until the 31 October deadline,
it is no surprise that manufacturers have reported a gloomy outlook.
“Each day of Brexit
uncertainty sees firms forced to withhold key investment and recruitment
decisions that make a huge difference to communities across the country.
“It is therefore
crucial that no more time is wasted in ending the Brexit deadlock, and that a
damaging no-deal cliff-edge is avoided at all costs.”
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:
- 13% of manufacturers reported
total order books to be above normal, and 41% said they were below normal,
giving a balance of -28% (from -13% in August) – compared to a long-run
average of -13%
- 6% of firms said their export
order books were above normal, and 37% said they were below normal, giving
a rounded balance of -32% (from -15% in August) – compared to a long-run
average of -17%
- 25% of businesses said the
volume of output over the past three months was up, and 24% said it was
down, giving a balance of +1% (from -3% in August, and roughly in line
with the long-run average of +4%)
- Manufacturers expect output
to contract at a fast pace in the coming quarter, with 19% predicting
growth, and 38% a decline, giving a balance of -19% - the weakest
expectations since April 2009
- Expectations for growth in
average selling prices for the coming three months (+12%) accelerated to
pace above the long-run average of +3%
- 30% of firms said their
present stocks of finished goods were more than adequate, whilst 2% said
they were less than adequate, giving a balance of +28% – the highest
balance since May 2009.
