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September 2023 - Industrial

Manufacturing output falls at fastest rate since September 2020 at the height of pandemic: The latest survey by the Confederation of British Industry (CBI) has revealed that manufacturing outputs have fallen at the fastest rate since September 2020 at the height of the Covid-19 pandemic.

The CBI's Industrial Trends Survey analysed the responses of 277 UK manufacturing firms, finding that while output is expected to be relatively stable over the next three months to November, it fell in 15 out of 17 sub-sectors in the three months to August, driven by the motor vehicles & transport equipment, mechanical engineering, paper, printing & media, and chemicals sub-sectors. Output volumes fell in the three months to August (weighted balance of -19%, from +3% in the three months to July).

Looking at order books the survey found that total order books were recorded as below normal levels in August (-15%) which was to a greater extent than in July (-9%). That said, the outturn was found to be broadly in line with the long-run average of -13%.

When it comes to export order books, the survey revealed these to be below 'normal' falling from -18% in July to -11% in August. This was on a par with the long-run average (-18%), according to the data.

Looking at the expectations for average selling price inflation, the survey found that they were "at their softest" since February 2021 (+8%, from +18% in July; long-run average of +7%), with expectations easing for 8 consecutive months. This is following a sharp fall from the "multi-decade high" seen in 2022 (+80% in March 2022)

CBI Principal Economist, Martin Sartorius, said of the latest findings:

“With output volumes contracting at their fastest pace since the COVID-19 pandemic and order books deteriorating, this survey makes for gloomy reading for manufacturers. However, easing price pressures will bring some relief to many manufacturing firms and the broader economy.

“The weak outlook for manufacturing activity underlines the need to double-down on delivering sustainable growth. With fierce levels of international competition, the race is on for the UK Government to offer targeted incentives to attract green investment and support firms’ decarbonisation efforts.”

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