The latest monthly CBI Industrial Trends Survey has shown that manufacturing output growth picked up in the quarter to November
Firms also saw overall order books rebound from a fall in October.
The CBI survey of 381 manufacturers found that output volume growth accelerated in the three months to November, outpacing the long-run average.
Output expanded in 13 of the 17 sub-sectors, with growth driven by the food, drink & tobacco, motor vehicles & transport equipment, and chemicals sub-sectors.
Rain Newton-Smith, CBI Chief Economist, said:
“It’s encouraging to see an improvement in the manufacturing sector after October’s stark survey, with order books and output growth on the up.
“But the future prosperity of manufacturers depends on getting the Brexit deal right. The overwhelming message from business to the Government is to make progress, don’t go backwards.
“We need frictionless trade for our world-beating manufactured goods and a transition period which draws us back from the cliff edge. Anything less than that and jobs and investment could suffer.”
However, firms are expected to see output growth to slow somewhat over the next quarter.
Tom Crotty, Group Director of INEOS and Chair of CBI Manufacturing Council, said:
“Improvements in output volumes and overall order books will come as some relief for manufacturers following a weaker outturn in October. Firms will have also broadly welcomed the Autumn Budget, especially the progress on Apprenticeship Levy reform.
“Manufacturers’ top priority unsurprisingly continues to be for the Government to secure frictionless trade and a Brexit transition period. The sector will also be urging the Government to rethink its proposed approach to immigration policy, which, by placing tight restrictions on low-skilled labour, would have a particularly negative impact on manufacturers.”
Further key findings from the report are as follows:
- 29% of manufacturers reported total order books to be above normal, and 19% said they were below normal, giving a balance of +10%. This was above the long-run average (-13%) and followed a weakening in October (-6%)
- 17% of firms said their export order books were above normal, and 17% said they were below normal, giving a normal balance (0) – above the long-run average of -17%, and marginally higher than October (-4%)
- 35% of businesses said the volume of output over the past three months was up, and 17% said it was down, giving a balance of +18%. This was above the historic average (+4%) and a slight pick-up from October (+13%)
- Manufacturers expect output to grow at a slower pace in the coming quarter, with 29% predicting growth, and 21% a decline, giving a balance of +8%
- Expectations for growth in average selling prices for the coming three months (+9%) were broadly unchanged from October (+10%), and the lowest since July 2017 (+9%)
- 16% of firms said their present stocks of finished goods were more than adequate, whilst 11% said they were less than adequate, giving a balance of +5% – below the long-run average (+13%).
- Meanwhile, total order books strengthened in November after worsening in October, and were more robust than the long-run average. Export order books improved marginally following a weakening in October, and, likewise, remained stronger than the historical average.