Manufacturer output volumes in the 3 months to September fell at a slower pace than in August, based on the latest CBI monthly Industrial Trends Survey.

The survey of 277 manufacturers discovered that output volumes declined in 10 of 17 sub-sectors – in contrast to 16 sectors reporting a fall last month – with the headline stop by output driven by the motor vehicles & transport equipment sub-sector.

For the first time since April, there was no improvement in overall order books, in September, with both total and export order books remaining far weaker than their long-run averages.

Looking ahead, firms anticipate that output will fall at a slower pace over the next 3 months. Manufacturers also expect output prices in the next three months to flatten.

Anna Leach, CBI Deputy Chief Economist, said: “While it’s good to see that output volumes once more fell at a slower pace this month when compared with August, it is disappointing to determine the modest improvements in order books stall, with demand in a still weak level.

“As manufacturing firms still battle against headwinds from a resurgence of the virus, weak global demand and uncertainty over our trading relationships, the federal government must step up its support.

“Because the Job Retention Scheme comes to an end, a successor must be found, while an offer with the EU will help underpin businesses’ resilience.”

Tom Crotty, Group Director at INEOS and Chair from the CBI Manufacturing Council, said: “Manufacturers have endured a really difficult summer and these weak activity figures are, therefore, unsurprising.

“Firms across the country are facing considerable uncertainty as the end of the Job Retention Scheme nears, and concerns about the potential for a no-deal Brexit have escalated as negotiations remain in stalemate.

“A solution to avoid a JRS cliff-edge will be a welcome boost to manufacturers continuing to deal with the impact of Covid-19. It is also crucial that the deal is agreed with the EU, as it is essential to support the economic recovery across the UK.”

Key findings:

Output

  • Output volumes within the three months to September (-20%) fell in a slower pace than in August (-46%)
  • Output dropped in 10 from 17 sub-sectors, with the headline decline driven primarily by the motor vehicles & transport equipment sub-secto
  • Manufacturers expect the decline in output to ease further in the next three months (-6%)

Order books

  • Total order books (-48%) deteriorated slightly on August (-44%), and remained significantly below their long-run average (-14%)
  • Export order books (-56%) strengthened slightly from August (-60%) but continue to be far below their long-run average (-18%)

Prices

  • Manufacturers expect output prices to become broadly flat in the next three months (-1% from -5% in August)

Stocks

  • Stock adequacy (+6% from +21% in August) weakened below its long-run average (+13%)

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