The survey of 307 manufacturers found that total order books improved in October (when they were at their weakest in nine years) but remained significantly below the long-run average. Export order books also strengthened on the previous month (when they were at their weakest since the financial crisis of 2008) but also continued to be below the long-run average.
Output volumes fell at a similar pace to October, with output expanding in only five out of 17 sub-sectors. The headline fall in output volumes was driven largely by the motor vehicles, metal products, and metal manufacture sub-sectors.
Meanwhile, the main positive contributors to output were the mechanical engineering and plastic products sub-sectors, alongside a boost from aerospace output. Looking ahead, firms anticipate output volumes to be flat in the next three months.
Manufacturers reported that stocks rose above ‘adequate’ levels and firms expect output prices to be flat in the next quarter.
Across the economy more broadly, growth in 2019 has been volatile, driven by businesses shifting activity in response to moving Brexit deadlines. CBI expects the economy to grow modestly in the event of a smooth transition to a new Brexit deal, with the longer-term economic impact dependent upon the details within the final deal.
Anna Leach, CBI deputy chief economist, said: “While the uncertainty from a No Deal Brexit has lifted somewhat, the manufacturing sector remains under pressure from weak global trade and a subdued domestic economy.
“Order books remain below average and output volumes continue to fall. When taking into account the deteriorating outlook for manufacturing globally, it’s clear that the outlook for the sector remains precarious.
“The General Election is an opportunity for all parties to explain how they will shore up our economy. Ratifying a Brexit deal and moving on to build a vibrant future relationship with our biggest trading partner, based on frictionless trade, will be vital – both for UK manufacturers, and business as a whole.”
Key findings:
- 13 percent of manufacturers reported total order books to be above normal and 40 percent said they were below normal, giving a rounded balance of -26 percent (up from -37 percent in October). This remains well below the long-run average (-13 percent)
- 13 percent of firms said their export order books were above normal, and 35 percent said they were below normal, giving a balance of -22 percent – below the long-run average of -17 percent but stronger than October (-41 percent)
- 26 percent of businesses said that the volume of output over the past three months was up, and 34 percent said it was down, giving a balance of minus nine percent. This decline was in line with that seen in October (-10 percent), and below the long-run average (plus four percent)
- Manufacturers expect output to be broadly flat in the coming quarter, with 24 percent predicting growth, and 25 percent a decline, giving a balance of minus one percent
- Average selling prices for the coming three months (minus one percent) are expected to remain steady.
- 21 percent of firms said their present stocks of finished goods were more than adequate, whilst three percent said they were less than adequate, giving a rounded balance of +17 percent – slightly above the long-run average (+13 percent).