UK manufacturing conditions still 'challenging' - CBI

The UK manufacturing sector continued to falter this month, industry research showed on Wednesday, although order books showed signs of improvement.

According to the latest Industrial Trends Survey from the Confederation of British Industry, output volumes fell in the three months to February, with a net balance of -19, compared to January’s -10.

Of the 17 sub-categories, output fell in 15, including chemicals and motor vehicles and transport equipment.

Total order books were also reported as below normal for the time of year. However, the balance did improve compared to January, rising to -20 from -30. It was also above consensus for -27.

Likewise, while export order books were below normal, the balance improved to -14 from -27 a month previously. It was also above the long-run average, of -18.

However, selling price expectations rose to 17 from 9 in January, the highest since July 2023.

Anna Leach, deputy chief economist at the CBI, said: "UK manufacturing conditions remain challenging.

"But there was also some hopeful signs: order books improved and manufacturers continue to expect output to improve in the months ahead.

"As we head towards the budget, it is critical that the chancellor uses this opportunity to put the country on a path to sustainable growth."

Gabriella Dickens, senior UK economist at Pantheon Macroeconomics, said: "The downturn in the manufacturing sector still has further to run. Although the index jumped by ten points, it is not seasonally-adjusted and usually rises in February following a temporary decline at the start of the year.

"More broadly, the jump in shipping costs appears to be putting manufacturers under some pressure to raise prices once more.

"While it points to core producer output price inflation edging up over the coming months, it should continue to run below 2%. We continue to think the headline rate of CPI inflation will return to target in April."

A total of 344 manufacturing firms were surveyed between 25 January and 13 February.

A balance is the weighted percentage of firms reporting an increase and those reporting a decrease.