Manufacturing output
volumes in the quarter to November continued to fall, according to the latest
monthly CBI Industrial Trends Survey.
The survey of 307
manufacturers found that total order books improved on October (when they were
at their weakest in nine years) but remained significantly below their long-run
average.
Export order books
also strengthened on the previous month (when they were at their weakest since
the financial crisis of 2008) but also continued to be below the long-run
average.
Output volumes fell
at a similar pace to October, with output expanding in only 5 out of 17
sub-sectors. The headline fall in output volumes was driven largely by the
motor vehicles, metal products, and metal manufacture sub-sectors. Meanwhile,
the main positive contributors to output were the mechanical engineering and
plastic products sub-sectors, alongside a boost from aerospace output. Looking
ahead, firms anticipate output volumes to be flat in the next three months.
Manufacturers
reported that stocks rose further above “adequate” levels. Meanwhile, firms
expect output prices to be flat in the next quarter.
Across the economy
more broadly, growth has been volatile during 2019, driven by businesses
shifting activity in response to moving Brexit deadlines. We expect the economy
to grow modestly in the event of a smooth transition to a new Brexit deal, with
the longer-term economic impact dependent upon the details within the final
deal. For more on the outlook, see our July
economic forecast.
Anna Leach, CBI
Deputy Chief Economist, said: “While the thick fog of uncertainty from a No
Deal Brexit has lifted somewhat, the manufacturing sector remains under
pressure from weak global trade and a subdued domestic economy.
“Order books remain
below average, and output volumes continue to fall. When taking into account
the deteriorating outlook for manufacturing globally, it’s clear that the
outlook for the sector remains precarious.
“The General
Election is an opportunity for all parties to explain how they will shore up
our economy. Ratifying a Brexit deal and moving on to build a vibrant future
relationship with our biggest trading partner, based on frictionless trade,
will be vital – both for UK manufacturers, and business as a whole.”
Key findings:
- 13% of manufacturers reported
total order books to be above normal, and 40% said they were below normal,
giving a rounded balance of -26% (up from -37% in October). This remains
well below the long-run average (-13%)
- 13% of firms said their
export order books were above normal, and 35% said they were below normal,
giving a balance of -22% – below the long-run average of -17% but stronger
than October (-41%)
- 26% of businesses said that
the volume of output over the past three months was up, and 34% said it
was down, giving a balance of -9%. This decline was in line with that seen
in October (-10%), and below the long-run average (+4%)
- Manufacturers expect output
to be broadly flat in the coming quarter, with 24% predicting growth, and
25% a decline, giving a balance of -1%
- Average selling prices for
the coming three months (-1%) are expected to remain steady.
- 21% of firms said their
present stocks of finished goods were more than adequate, whilst 3% said
they were less than adequate, giving a rounded balance of +17% – slightly
above the long-run average (+13%).
