Contrasting output and outlook for manufacturing

The results of CBI’s Industrial Trends Survey plotted since 2007.The results of CBI’s Industrial Trends Survey plotted since 2007.

Any UK catering equipment manufacturers may have mixed feelings about the CBI’s latest monthly Industrial Trends Survey. While the research states that UK manufacturing firms reported output growth easing in the 3 months to September, expectations for selling prices have remained elevated.

The survey of 429 manufacturers found that while output growth slowed last quarter, largely driven by the food and drink sector, the rate of growth remained well above the long-run average. Respondents expect output growth to bounce back next quarter, broadly matching the robust pace seen in the 3 months to July and August.

Both total orders books and export order books remained strong, although total order books softened somewhat on August. The deterioration was relatively broad-based with nine of the 17 sub-sectors reporting a decline relative to August.

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Firms’ expectations for output price inflation remain elevated after picking up in the 3 months to August, but have eased compared with the first half of 2017.

Stock levels were considered to be above adequate levels, but below the long-run average.

Anna Leach, CBI head of economic intelligence, said: “Manufacturers continue to report solid growth in output, while total order books and export order books are holding firm.

“Expectations for selling prices were largely in-line with the previous month, but price pressures do appear to have moderated somewhat since earlier in the year.”

Key findings

•    24% of manufacturers reported total order books to be above normal, and 17% said they were below normal, giving a balance of +7% – that is below the +13% recorded in August but well above the long-run average of -14%

•    19% of firms said their export order books were above normal, and 9% said they were below normal, giving a rounded balance of +10% (compared to +11% in August) – well above the long-run average of -19%

•    37% of businesses said the volume of output over the past 3 months was up, and 20% said it was down, giving a balance of +17% (compared with +30% in August) – above the long-run average of +3%

•    Manufacturers expect output to growth to accelerate in the coming quarter, with 39% predicting volumes to increase, and 12% expecting a decline, giving a rounded balance of +28%

•    27% of companies expect average selling prices to increase in the coming 3 months, with only 9% predicting a decline, giving a rounded balance of +18% – significantly above long-run average of +2%

•    16% of firms said their present stocks of finished goods are more than adequate, whilst 10% said they were less than adequate, giving a balance of +6% – below the long-run average (+13%).

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