Manufacturing growth remains firm but export weakness continues, says CBI

UK manufacturing growth remains above average and is broad-based, but sluggish export demand means the recovery has slowed compared to earlier in the year, according to the CBI’s latest Industrial Trends Survey.

The majority of sectors (15 of 18) reported below-par export orders, with mechanical engineering the lowest for two years, though this was offset by stronger performance in the aerospace sector.

Manufacturers expect output prices to be flat over the coming three months, little changed from recent months.

“Manufacturers are particularly struggling in export markets due to a challenging global economic climate, including sluggish Eurozone growth, and also slowing emerging markets, such as China.”Key findings:

• 36% of firms saw output rise in the past three months, with 22% saying it fell, giving a rounded balance of +15%
• Expectations are for weaker growth in the next three months, with 29% predicting a rise in the volume of output and 18% a decline, leaving a rounded balance of +12%, the lowest in 13 months (when the balance was +9%).
• 17% of firms said their export order books were above normal and 34% reported below normal order levels, resulting in a balance of -17% (compared to an average of -20%). Total orders books were stronger than average, at +3% compared to -16%.
• Output price inflation expectations remain largely unchanged from previous months. 8% of firms expect output prices to rise over the next three months, with the same number expecting them to fall, leaving a rounded balance of -1%.
• 15% of firms reported present stocks of finished goods as more than adequate, with 8% less than adequate, giving a balance of +7%.