The latest Industrial Trends Survey (ITS) from the Confederation of British Industry (CBI) indicates a decline in manufacturing output volumes over the three months leading up to August. While manufacturers anticipate a slight increase in output for the coming three months, their outlook has softened compared to previous months.
According to the survey, which reflects the views of 222 manufacturers, output volumes decreased during the period, marking the first drop since March. The balance of manufacturers reporting decreased output stands at -9%, a significant shift from the -3% reported for the previous quarter. Despite this decline, manufacturers expect output to increase modestly in the three months to November, with a projected balance of +9%, although this is down from +25% in July, which was the strongest outlook in two years.
The survey highlights a mixed picture for different sectors. Output fell in 10 of 17 sub-sectors, notably within furniture & upholstery, glass & ceramics, and electrical goods. However, total order books showed some improvement in August, though they remain below “normal” levels and below long-run averages. The balance for total order books improved to -22% from -32% in July.
Export order books also fell slightly from -18% to -22%, indicating continued challenges in international markets. Meanwhile, expectations for average selling price inflation surged to +15%, up from +2% in July, surpassing the long-run average of +7%. Stocks of finished goods were reported as more than adequate, with a balance of +15%, aligning closely with the long-run average of +12%.
CBI Lead Economist Ben Jones commented on the findings: “August’s data reflects a stop-start recovery in manufacturing, with output volumes falling for the first time since March and order books remaining below average. Despite these challenges, there is cautious optimism among manufacturers about modest growth in the autumn.”
Jones also urged the new government to take decisive action to support the sector, suggesting that the upcoming autumn Budget could present an opportunity for significant policy reforms. These could include updates to business rates, a simplified business tax roadmap, and a comprehensive industrial strategy to foster investment and growth.
The CBI Industrial Trends Survey for August 2024, conducted from July 26 to August 13, captures the sentiment of 222 manufacturing firms, providing a snapshot of current industry conditions and future expectations.