UK manufacturing output eases, but investment intentions recover

Growth in manufacturing output and orders eased in the quarter to July, slowing to more typical rates of expansion following a period of exceptionally strong growth over the previous year.

This is according to the latest CBI/Accenture Quarterly Industrial Trends Survey.

Average costs and prices continued to rise sharply, with similar rates of cost and price inflation expected next quarter.

Optimism within the sector fell for a third consecutive quarter. However, investment intentions generally improved, and employment within the sector continued to grow at a robust pace, though less quickly than expected last quarter (for the third quarter running). Concerns over shortages of labour and shortages of components and materials remained acute.

The survey is based on the responses of 237 manufacturing firms. 

Anna Leach, CBI deputy chief economist, said, “The manufacturing sector has been a relative bright-spot in our economic surveys over recent months, but with output and orders now softening, conditions are becoming more uncertain for a sector already being buffeted by high-cost inflation and ongoing supply challenges. It is encouraging, however, to see investment intentions firming.

“Stronger investment will be vital if the UK is to reinvigorate growth and keep recession at bay. The new prime minister will need act quickly to fan the flames of these ambitions by announcing a permanent successor to the Super Deduction and urgently reforming an outdated business rates system that currently acts as a tax on investment.”

CBI
www.cbi.org.uk

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CBI

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