UK Manufacturing Growth Holds Up, But Orders Weaken

Phil Black - PII Editor 19/09/2014

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The UK’s manufacturers had a mixed month in September, with production continuing to rise steadily but order books deteriorating. That’s according to the CBI’s latest Industrial Trends Survey.

The survey of 488 manufacturers across the UK was carried out between 20th August and 10th September. It revealed that output growth remained solid in the last quarter and is expected to strengthen further in the coming three months. But firms saw total order books fall below “normal” levels, and export order books worsened significantly, and are now at their weakest since January 2013.

Stocks adequacy fell back below average and inflation expectations remain muted, with manufacturers once again expecting flat output prices over the next three months.

Katja Hall, CBI Deputy Director-General, said:

“Against a backdrop of acute political uncertainty at home and abroad, exports orders for UK manufacturers are faltering, which is disappointing.

“However, it’s encouraging that output growth has remained solid and firms expect production to rise strongly in the next quarter.”

Key findings:

34% of firms saw the volume of output rise in the last three months, and 19% said it fell, giving a balance of +15%
Expectations are for stronger growth next month with 36% predicting a rise in the volume of output and 9% a decline. That gives a balance of +27%
14% of firms said their export order books were above normal and 38% said they were below normal, giving a balance of -24%, against a long-run average of -20%
Output price inflation expectations remained muted: 8% of firms expect output prices to rise over the next three months and 7% expect them to fall, giving a balance of +1%
16% of firms said their present stocks of finished goods were more than adequate, and 6% reported they were less than adequate, giving a rounded balance of +9%.