Manufacturing output volumes fell at a sharp pace in the quarter to August, after being broadly flat in July, according to the CBI’s latest Industrial Trends Survey (ITS). Manufacturers expect output to fall again over three months to November.
Total and export order books were both reported as below “normal” and were below their long-run averages. Stocks of finished goods were more than adequate in August, but that adequacy stands below the long-run average.
Meanwhile, expectations for selling price inflation eased noticeably in August, with the expected pace of growth in selling prices over the coming quarter the weakest since October and around its long-run average.
Ben Jones, CBI lead economist, said: “Manufacturers report that rising costs are squeezing margins and leaving customers more cautious, which in turn is hitting orders and weighing on output. With weak demand compounded by trade frictions and policy uncertainty, the outlook for UK manufacturers remains challenging.
“As firms continue to cite, they are contending with a range of cost pressures from high energy costs to the additional burden from last year’s Autumn Budget increase in employer NICs.
“Against this backdrop, the upcoming Autumn Budget is a pivotal moment to shore up business sentiment. The government must provide business tax certainty and further Growth and Skills Levy flexibility, accelerate industrial and infrastructure strategy implementation, and broaden support to tackle uncompetitive energy prices.
“The CBI stands ready to partner with the government to co-design the policies that will build a truly competitive, innovative, and prosperous UK economy.”
