Manufacturer output volumes in the 3 months to August continued to fall quickly, but the pace of decline eased somewhat from last month’s survey record decline. That’s based on the latest CBI monthly Industrial Trends Survey.

The survey of 278 manufacturers found that output volumes declined in 16 of 17 sub-sectors, with the headline drop in output being primarily driven by the mechanical engineering, food, drink & tobacco, and cars & transport equipment sub-sectors.

Both total and export order books remained well below their long-run averages.

Looking ahead, manufacturers expect output to fall in a much slower pace in the next three months. Firms also anticipate output prices within the next three months to fall in a modest pace.

Anna Leach, CBI Deputy Chief Economist, said: “This has been another difficult month for manufacturers. Activity remains poor and order books severely depressed, even though the worst of the decline seems to be behind us.

“It is a relief to determine the pressure on manufacturers beginning to ease. As the sector looks to rebuild from the economic shock, the Government must consider additional ways to support this sector to assist reinforce a recovery, for example grants and further business rates relief.

“Once we head into the autumn months, a coherent plan to ensure the manufacturing sector is resilient to some potential second wave and to the challenge of adapting to a brand new trading relationship with the EU is essential.”

Tom Crotty, Group Director at INEOS and Chair from the CBI Manufacturing Council, said: “The survey results show some early indications of the manufacturing downturn bottoming out, but it's clear that many firms stay in distress and the sector looks looking for a challenging Autumn.

“As the government looks to economic recovery, it is crucial that it continues to support firms through the difficult months ahead, and use us to build a more resilient manufacturing sector.”

 

Key findings:

Output

  • Output volumes in the three months to August (-46%) fell sharply, even though the pace moderated on July’s survey-record decline (-59%)
  • Output dropped in 16 out of 17 sub-sectors, with the headline decline driven primarily by the mechanical engineering, food, drink & tobacco, and motor vehicles & transport equipment sub-sectors
  • Manufacturers expect output to fall at a much slower pace in the next three months (-10%).

Order books

  • Total order books remained considerably weaker (-44%), than their long-run average (-14%).
  • Export order books (-60%) strengthened slightly from July (-64%) but continue being far below their long-run average (-18%).

Prices

  • Manufacturers expect output prices to decline at a modest pace in the next three months (-5% from +4% in July).

Stocks

  • Stock adequacy (+21% from +19% in July) remained above its long-run average (+13%).

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