Tuesday, October 19, 2021

Manufacturing orders strongest on record in September – CBI

UK manufacturing total order books in September improved to their highest on record (since 1977), according to the latest monthly CBI Industrial Trends Survey.

The survey of 273 manufacturing firms saw total order books improve further on August’s strong results to reach a record high, while export order books also improved to their strongest since March 2019.

However, output growth in the three months for September slowed for the second month in a row, despite remaining firm by historical standards. Eleven out of 17 sectors saw output increase, with headline growth being driven largely by the food, drink & tobacco sub-sector.

Stock adequacy picked up slightly, but nonetheless remained close to last month’s record low and considerably below average.

Meanwhile, expectations for output price growth in the coming quarter remain strong.

Anna Leach, CBI Deputy Chief Economist, said: “Today’s survey highlights how amidst a variety of supply challenges, companies are beginning to struggle to meet high demand.

“Despite close to half of manufacturers surveyed reporting order books above normal, output growth has slowed sharply, albeit remaining relatively robust. As well as skill and labour shortages, sharply increasing material costs and shortages of key components, producers now face rocketing energy prices.

“Current issues reinforce the need for Government to take a more active approach to gripping the economic recovery. That will mean working together with business to ease these critical supply challenges that are affecting manufacturing production across the UK and risk putting the brakes on the recovery.

“With pressure on energy supply set to increase in the colder months ahead, energy security is vital for ensuring that crucial parts of the supply chain are able to continue operating.”

Tom Crotty, Group Director at INEOS and Chair of the CBI Manufacturing Council, said: “It is reassuring to see order books reaching new highs, but global supply chain issues and cost pressures are continuing to hold back the sector. It is important that these issues are addressed as a priority.

“Looking ahead, the Chancellor has an excellent opportunity at the upcoming Spending Review to give manufacturing a shot in the arm and enable it to be a powerful engine for the UK’s economic growth and renewal.

“Firms will be looking for decisive action, be that an overhaul of the outdated business rates system, reform of the Apprenticeship Levy or bold public support for emerging industries and new technology.”

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