Manufacturers have endured another difficult month but, following months of destocking, their outlook for production over the three months ahead is the least negative since June 2008, the CBI has revealed.
Answering its latest Industrial Trends Survey, 32 per cent of UK manufacturers said they expected the volume of output to fall over the next three months, while 27 per cent said it should increase. Although the resulting balance of -5 per cent represents a slight fall in output, it is the least negative prediction since June 2008.
Demand remains very weak, however, with a balance of 54 per cent of manufacturers reporting that total order books are below normal. This was a slight improvement on July’s 17-year low (-59 per cent) but marked the seventh consecutive month that orders have remained significantly below par.
Export order book levels have also remained feeble, despite the relative weakness of the Sterling, with a balance of 48 per cent reporting them to be below normal.
Richard Lambert, CBI director-general, said: ‘Manufacturers are facing weak demand at home and abroad and their order books continue to look anaemic.
‘More positively, expectations for manufacturing output over the coming three months are the least negative in more than a year. This is partly because many firms have run their stock levels down quite aggressively over the summer, so some manufacturers are now looking to raise production.
‘It looks like destocking in the manufacturing sector may be coming to an end, which offers a further sign that the UK economy is starting to stabilise,’ he added.
Following heavy destocking over the past few months, a balance of 13 per cent of companies said that stocks are more than adequate to meet demand – and stocks now stand at their most moderate level since July 2008.
Manufacturers are still expecting to lower domestic prices over the next quarter, but the pace of these anticipated price falls (a balance of -10 per cent) has eased slightly from July (when it was -17 per cent).