UK manufacturers forecast a moderate reduction in output

UK manufacturers are expecting to reduce output over the next three months while overall orders are relatively flat, according to the CBI’s latest monthly Industrial Trends Survey.

Of the 409 manufacturers responding to the survey, only 19 per cent said they expect to increase their volume of output over the course of the next three months, while 28 per cent expect it to fall.

The resulting balance of -9 per cent marks the lowest prediction this year and is below the long-run average (+6 per cent). The anticipated fall is broad based, with only motor vehicles and the transport equipment sub-sector expecting to increase output.

The total order book (-21 per cent) remained broadly flat this month and only slightly under the long-run average (-17 per cent), although there was an upswing in export orders.

The export order book (-12 per cent) moved back above its long-run average (-21 per cent), rebounding from last month’s low (-22 per cent). This upturn was predominantly driven by the mechanical engineering, food, drink and tobacco and motor vehicles and transport equipment sub-sectors. Chemicals — which represents the largest export sector in the survey — reported a sharp drop.

Stock levels remained stable after last month’s sharp fall at +5 per cent. The overall balance of +8 per cent of companies expecting output prices to increase over the next three months changed little from October. The food, drink and tobacco sector is predicting a sharp rise in output prices over the next three months (+42 per cent balance), but this is tempered by modest inflation expectations in other sectors.