UK manufacturers see output volumes fall

Output across the UK manufacturing sector fell over the last three months, a closely-watched survey showed on Tuesday, but price pressures started to ease.

According to the latest CBI Industrial Trends survey, the output volumes balance fell sharply in the three months to April, from -6 in March to -15, the lowest since July 2020. Output fell in 13 of the 17 sub-sectors, with the decline driven by motor vehicles and transport equipment.

The measure of stocks of finished goods rose to +19, while total order books had a balance of -20. However, while that was below the average, it was unchanged on March and marginally better than expected, with most analysts forecasting -21.

Total new orders were also broadly stable at -3, unchanged on January’s balance, while costs rose at the slowest pace since April 2021, with a balance of +50 compared to +64 in January, although it remains well above the long-run average of +17.

Costs growth was also expected to slow further in the three months to July.

Business sentiment held steady, at -2 compared to -5 in the three months to January.

Gabriella Dickens, senior UK economist at Pantheon Macroeconomics, said: "April’s survey provides some early signs that the downturn in the manufacturing sector is starting to bottom out.

"Manufacturers were the most upbeat about the outlook for demand since the fourth quarter of 2021. Consumer demand has been more resilient than widely expected six months ago, and will be supported over the coming months by the recent 10.1% increase in benefits and a sharp fall in energy prices."

The survey of 262 manufacturers was carried out between 24 March and 12 April.

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