Manufacturers 'treading water' – CBI

Production levels among manufacturers were flat in the three months to June, disappointing expectations of strong growth, according to the latest CBI monthly Industrial Trends Survey. Firms continue to anticipate a modest expansion in output over the coming three months, but they are less upbeat than a few months ago. The survey of over 400 manufacturers found that total orders and export order books were little changed on last month and in line with their long-run averages.

Small and medium-sized firms struggled to maintain their export orders which reached their lowest levels since January 2010. The motor vehicles, aerospace & transport equipment sector (especially large firms in that sector) was one of the few export drivers, reporting orders comfortably above average. Stock adequacy rose to its highest levels since October 2011. Meanwhile, expectations for output price inflation are at a nine month low, and are particularly weak in the metal and plastic products sectors.

Stephen Gifford, CBI Director of Economics, said: "Manufacturers are treading water with domestic and export orders stagnant. Production levels remain flat, but firms predict a modest pick-up over the coming three months. While an expected improvement in conditions at home and abroad should lead to better prospects for manufacturers, the business climate still remains quite fragile."

Key findings – month to June:

  • 14% of firms reported that total order books were above normal and 32% said they were below, giving a balance of -18%, which is in line with the long-run average (-17%)
  • The balance for export order books (-22%) was the lowest since January 2013 (-29%), with 11% reporting export orders above normal and 33% below
  • Small and medium-sized firms struggled most with export orders, the furthest below normal since January 2010 (-29%, against -33% in January 2010). The motor vehicles, aerospace & transport equipment sector was the strongest positive contributor to export order levels and at +6% was the highest since September 2012 (+9%)
  • Total order books (-18%) were broadly similar to last month (-20%), while export order books deteriorated slightly (-22%, against -17% in May)
  • Volume of output was broadly flat over the last three months. With 26% of participants reporting output was up and 24% down giving a balance of +2% which dashed expectations of solid growth back in March (+22%)
  • However, firms believe output will increase in the next three months (+10%), although expectations have moderated in recent months (March +22%, April +23%, May +18%)
  • Average prices over the next three months are expected to be flat (+3%), the lowest since September 2012 (+3%)
  • Stock levels of finished goods (+21%) were above adequate to the greatest extent since October 2011 (+21%), having moved above their long-run average (+14%).

Comments (0)

Add a Comment

This thread has been closed from taking new comments.

Editorial: +44 (0)1892 536363
Publisher: +44 (0)208 440 0372
Subscribe FREE to the weekly E-newsletter