UK manufacturing output growth picked up in the three months to February, but the balance of manufacturers expecting price rises in the next three months was at its highest since December 1976.
That’s according to the latest monthly CBI Industrial Trends Survey, based on responses from 224 manufacturing firms.
The survey found:
- The balance of manufacturers who expect price rises in the next three months rose to the highest since December 1976 (+77% in February 2022, +78% in December 1976).
- Growth in output volumes accelerated in the three months to February compared with the same period one month earlier (+26% from +14%). Output increased in 13 out of 17 sectors, with growth driven by the chemicals and food, drink and tobacco sub-sectors.
- Total order books were strong in February (+20%, from +24% in January), while export order books improved slightly and remained above their long run average (-7%, from -10% in January; average of -19%).
- Stocks of finished goods were seen as inadequate again in February, but with some improvement shown for the second consecutive month (-14% from -17%).
Anna Leach, CBI Deputy Chief Economist said: “Manufacturers will be buoyed by strong order books and output growth, but amid ongoing cost pressures, almost 4 in 5 firms expect to increase prices in the next three months.
“With high inflation dampening growth prospects in the wider economy, the Government must use the Spring Statement to help get businesses investing more, supporting higher growth, productivity and wages. That should start with a permanent Investment Deduction as a successor to the Super Deduction, which ends next year.”
Tom Crotty, Group Director at INEOS and Chair of the CBI Manufacturing Council, said: “It is great to see that total order books remained strong in February and that output volumes grew more quickly than in last month’s survey, increasing in 13 out of 17 sectors. But with rising prices and inadequate stocks of finished goods, the cost-of-living crunch continues to bite across the sector, alongside continuing global energy and supply chain challenges.
“While the Government must continue to address these shorter-term challenges, it must also look ahead and focus on productivity. For instance, with a future-focused approach to skills and regulation and an industrial strategy that instils confidence in manufacturers.”
