Economy

UK manufacturing output falls at fastest pace since financial crisis

Forty-one per cent of manufacturers report orders short of expectations, CBI survey finds

Seven per cent of firms that responded to the CBI survey said their export order books were above normal, while 42 per cent said they were below normal.

Simon Neville
Tue Dec 17 2019 - 20:55

Manufacturers across the UK saw output in the three months to December fall at the fastest rate since the financial crisis, according to the Confederation of British Industry.

Total order books remained weak, while export order books worsened compared with November, the latest monthly CBI Industrial Trends Survey of 289 manufacturers found.

The sector has suffered particularly hard during the past three years, with uncertainty over Brexit, the recent general election and US-China trade tensions all hitting business.

Bosses now hope that a strong Conservative majority in parliament will help provide the certainty needed by clients to start spending again.

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Anna Leach, CBI deputy chief economist, said: "With manufacturers reporting that output is declining at a pace not seen since the financial crisis, alongside another month of softer order books, it is crucially important to rebuild business confidence in this sector.

“After three years of gridlock, the prime minister now has a clear mandate to govern. Businesses across the UK will want him to break the cycle of uncertainty. Firms will be looking for reassurance of the new government’s commitment to getting the UK economy fighting fit as it prepares to exit the EU.”

Order books

The survey found that 13 per cent of manufacturers reported order books to be above normal, but 41 per cent say their orders were below where they expected – giving a balance of minus 28 per cent. The long-run average is minus 13 per cent.

A further 7 per cent of firms said their export order books were above normal, while 42 per cent said they were below normal, giving a balance of minus 35 per cent, remaining below their long-run average of minus 17 per cent.

There was hope within the sector of improvements, as companies which have been putting off new investment, start to become more confident again.

Those surveyed said they believed output volumes would continue to fall in the first three months of 2020, but at a slower pace than currently. They also believe selling prices will grow over that period.

Tom Crotty, group director of Ineos and chairman of the CBI Manufacturing Council, said: "These disappointing figures are reflective of the widespread weakness in the global manufacturing sector and the impact of continued Brexit uncertainty in the run-up to the general election.

“Following the general election, manufacturers will be eager to see the prime minister break the cycle of Brexit uncertainty as a priority.

“There is also a fresh opportunity for the sector to work with the government to solve long-term challenges such as raising productivity, addressing skills shortages, improving sustainability and tackling climate change.” – PA

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