Output stabilises in UK manufacturing industry, CBI survey shows

The survey of 291 manufacturers also found that total new orders fell moderately in the three months to January, after stabilising in the quarter to October, and prior to that, falling for five quarters in a row. A sharp decline was seen in domestic orders, while export orders fell at a similar pace to October.

Manufacturing employment fell again in the three months to January, but at the slowest pace since October 2019. But business sentiment declined significantly after staying flat over the second half of 2020. Optimism around export prospects also continued to fall notably.

Output is expected to fall in the quarter ahead. Firms also anticipate total new orders to fall at a slightly quicker pace, reflecting faster declines in domestic and export orders. Headcount is expected to be broadly flat.

Meanwhile, almost half of manufacturers – the highest share since January 1975 – are concerned that access to materials or components may limit their output over the quarter ahead.

Rain Newton-Smith, CBI chief economist, said: “Output was broadly flat in this month’s quarterly survey, with the picture varying in different sectors. Manufacturers across the board are continuing to battle major headwinds, with domestic and export orders notably falling.

“With growing costs and materials shortages mounting further pressure on firms at a time when they’re experiencing much less demand, the Government must avoid tapering off existing business support with a cliff edge in March.

“Acting swiftly ahead of the Budget to boost cash flow and shore up resilience will be essential. Crucially, extending the Job Retention Scheme and repayment periods for VAT deferrals until the end of Q2 will go a long way. And for the duration of the crisis, business support must remain in lockstep with restrictions.”

CBI www.cbi.org.uk