Manufacturing sees slow output but growth remains strong

Manufacturing order books weakened in the three months to March, but remained well above their long-run average, according to the latest monthly CBI Industrial Trends Survey.

The growth of manufacturing output slowed in the three months to March but remained above average, according to the latest CBI Industrial Trends Survey.

A survey of 381 manufacturers showed that export order books remained unchanged and above the long-run average.  

Compared to the three months to February, output continued to grow but at a much slower pace.

Out of the 17 manufacturing sub-sectors, 14 had an increase in output growth. Growth was predominantly driven by motor vehicle and transport equipment, chemicals and electronic engineering sectors. Respondents of the survey anticipate that output growth will slow over the next three months, matching the pace set in November and December 2017.

Meanwhile, expectations for output price inflation continue to weaken but still remain above historical average. Stocks were considered to be above satisfactory levels and moved above the long-run average for the first time since September 2016.

Strong global demand and the decreased price of the pound will continue to encourage demand for the manufacturing sector, CBI states.

Anna Leach, CBI head of Economic Intelligence, said: “Robust global growth and the low pound have gifted UK manufacturers a strong first quarter in 2018. Although total order books and output growth slipped relative to February, demand and output growth remain well ahead of long-run averages.

“Confidence among manufacturers will have been given an additional boost by the agreement of a transition deal, giving them the confidence to continue investing and planning for growth. Other hurdles on the Brexit path need to be cleared in the same spirit – this includes a speedy agreement of a mutually beneficial trade deal for both the UK and the EU, with a customs union one of the options on the table.”

Tom Crotty, group director of Ineos and Chair of CBI Manufacturing Council, said:

“A buoyant global economy and the low pound continue to work their magic on demand for UK manufactured goods. But while the agreement of a transition deal on Monday is welcome, the sector is still in limbo. Swift progress is needed on a deal which preserves barrier-free access to the EU market, and allows manufacturers to access the people and skills that they need from the continent.”