Advertisements

UK Manufacturers Witness Steepest Output Drop Since 2020, CBI Survey Reveals

by Anna

In a recent release of findings from the CBI’s latest Industrial Trends Survey, manufacturers have reported the most significant decrease in output volumes since September 2020. Key contributors to this downturn include the sub-sectors of motor vehicles and transport equipment, mechanical engineering, paper, printing, media, and chemicals. As the three-month period leading up to August saw a decline in output, there’s a glimmer of optimism for the subsequent months with the anticipation of stabilizing output volumes.

Advertisements

According to the survey’s insights, manufacturers are forecasting a continued reduction in price pressures, projecting the softest expectations for selling price inflation over the next three months since February 2021.

Advertisements

Martin Sartorius, CBI Principal Economist, expressed, “This survey provides a somber reflection for manufacturers, with output volumes contracting at an unprecedented pace since the onset of the COVID-19 pandemic and order books witnessing deterioration. Nevertheless, the alleviation of price pressures could offer a measure of solace to numerous manufacturing entities and the wider economy.”

Sartorius emphasized the pressing need for sustained growth efforts, particularly in light of intense international competition. He stressed the urgency for the UK government to proactively incentivize green investments and extend support to firms striving for decarbonization.

Based on responses from 277 manufacturing firms, the survey’s key findings are as follows:

Output Volume Decline: Output volumes experienced a sharp decrease in the three months leading up to August, with a weighted balance of -19%, marking the steepest decline since September 2020. However, prospects for the following months are expected to stabilize, with a projected balance of -3% for the three months leading up to November.

Sub-Sector Contraction: Of the 17 sub-sectors surveyed, 15 witnessed output declines in the three months up to August. The most notable contractions were observed in the motor vehicles and transport equipment, mechanical engineering, paper, printing, media, and chemicals sub-sectors.

Order Books’ Status: In August, both total order books and export order books were below the “normal” level. Total order books exhibited a more substantial decline in August compared to July, with a balance of -15% as opposed to -9%. Export order books deteriorated further in August, standing at -18% compared to -11% in the previous month.

Price Inflation Expectations: The anticipation of average selling price inflation witnessed a decline, registering a balance of +8%, a notable decrease from +18% in July. This projection is also in line with the long-run average of +7%. The consistent easing of expectations for selling price inflation over the last eight months reflects a trend away from the multi-decade high observed in March 2022 (+80%).

Finished Goods Stock: The survey noted that stocks of finished goods were considered more than “adequate” in August, with a balance of +7%. This figure represents an increase from 0% in July and aligns with the long-run average of +12%.

As manufacturers navigate these challenging circumstances, the insights from the CBI’s Industrial Trends Survey offer a comprehensive perspective on the current state of affairs. With economic dynamics and global competition playing a significant role, the concerted efforts of governments and businesses alike are poised to shape the trajectory of the manufacturing sector’s revival.

Advertisements
Advertisements

You may also like

Copyright © 2023 ourmechanicalcenter.com