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Output volumes rise, but decline expected to resume next quarter – CBI Industrial Trends Survey
UK manufacturers reported a rise in output in the three months to November, the first increase since the three months to July 2022, according to the CBI’s latest Industrial Trends Survey. However, production is expected to decline in the next quarter.
The survey found that while stocks remained broadly adequate, total order books and export order books were reported as below normal. Selling price inflation is expected to remain historically high in the next three months (though below the record high reached earlier this year).
The survey, based on the responses of 230 manufacturing firms, found:
- Manufacturing output volumes rose in the three months to November (balance of +18%, from -4% in the three months to October), the first increase since the three months to July 2022. However, output is expected to fall in the three months to February (-10%).
- Output increased in 9 out of 17 sectors in the three months to November. The increase in output reported this quarter was largely driven by the food, drink & tobacco, motor vehicles and transport equipment, and chemicals sectors.
- Total order books were reported as below “normal” in November, and to a similar extent to October (balance of -5% from -4%). Export orders were also seen as below normal, but to a lesser extent than last month (-7% from -14%). Nonetheless, both total and export order books remained above their long-run averages (-13% and -18% respectively).
- Expectations for average selling price inflation for the next three months remained at a broadly similar level to last month (+47% from +46%), although this remains comfortably below the multi-decade highs seen earlier in the year (+80% in March). Expectations for selling price inflation remained well above the long-run average (+6%).
- Stocks of finished goods were seen as broadly adequate in November, to a similar degree as in October (+5% from +7%).
Anna Leach, CBI Deputy Chief Economist, yesterday said:
“The rise in manufacturing output this month appears to be at least partly driven by improvements to supply chains, with several companies reporting they were able to fulfil orders as materials and components became more readily available. Total order books remained much weaker than earlier in the year, however, and output is expected to fall again in the quarter ahead.
“Against a difficult economic backdrop, manufacturers welcomed aspects of last week’s Autumn Statement, notably business rates relief and commitments to R&D and infrastructure spending.
“But little was said about two of the most pressing issues that are currently holding the sector back: the future of the business energy support scheme and access to skills. This leaves big question marks hanging over the competitiveness of UK manufacturing.”
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