UK manufacturing output drops despite aerospace boost

Manufacturing output in the quarter to November continued to fall amid continuing political and economic uncertainty, the latest CBI survey shows.

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 further above “adequate” levels. Meanwhile, firms expect output prices to be flat in the next quarter.

Across the economy more broadly, growth has been volatile during 2019, driven by businesses shifting activity in response to moving Brexit deadlines. We expect 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. For more on the outlook, see our July economic forecast.

Anna Leach, CBI deputy chief economist, said: “While the thick fog of 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.”

CBI www.cbi.org.uk