Manufacturing Output Decline Slows In Quarter To February – CBI Industrial Trends Survey

Manufacturing output volumes fell in the three months to February, though at a slower pace than in January – according to the CBI’s latest Industrial Trends Survey (ITS). Manufacturers expect volumes to decline at a similar pace in the three months to May.

Total and export order books remained historically weak in February. Stock adequacy strengthened, while selling price inflation expectations continued to be elevated.

The survey, based on the responses of 305 manufacturers, found:

• Output volumes fell in the three months to February, but at a slower pace than in the three months to January (weighted balance of -14%, from -25% in January). Manufacturers expect output volumes to decline at a broadly similar pace in the three months to May (-12%).

  
  

• Output decreased in 13 out of 17 sub-sectors  in the three months to February, with the fall being driven by the metal products, food, drink & tobacco, and mechanical engineering sub-sectors.

  
  

• Total order books  were reported as below “normal” in February (-28%, from -30% in January), remaining considerably weaker than the long-run average (-14%).

  
  

• Export order books  were also reported as below “normal”, to a slightly lesser extent than in January (-26%, from -30% in January). The balance was also below the long-run average (-19%).

  
  

• Expectations for average selling price inflation  were elevated in February (+26%, from +29% in January), standing well above the long-run average (+8%).

  
  

• Stocks of finished goods  were reported as “more than adequate” in February (+14%, from +3% in January), with the balance being broadly in line with the long-run average (+12%).

  
  

Cameron Martin, CBI Senior Economist, said:

“The downturn in manufacturing output eased in February, after a downbeat period around the turn of the year. However, many firms continue to report customers holding back amid low confidence and elevated cost pressures."

“The Spring Forecast is an opportunity for the government to build momentum behind its growth mission and restore confidence. Manufacturers want to see the government focused on accelerating Industrial Strategy delivery, addressing skills shortages, and lowering the cost of doing business by bringing forward energy costs support. Tackling punitive energy costs will strengthen competitiveness, ease cost of living pressures, and help boost demand across the economy.”