UK manufacturing output stabilises in December - CBI

Output in the UK manufacturing sector stabilised in December, but orders remained subdued, according to a survey released on Tuesday.

The Confederation of British Industry's monthly order book balance rose to -23 from -35 in November. This was above consensus expectations for a balance of -29 but still considered "below normal".

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

CBI deputy chief economist Anna Leach said: "UK manufacturers appear to have ended the year on a stable footing. with December’s results only the second set this year to not show falling activity. Selling price expectations are the weakest they have been in two years, reflecting ongoing improvements in supply conditions and soft demand.

"The environment for UK manufacturing is likely to remain challenging, with global growth set to remain weak in the year ahead. High interest rates will continue to weigh on household spending, while adding to business costs. And sticky domestic inflation and strong wage growth suggest cuts to UK interest rates are still some way off.

"With an election looming, the broader policy environment is set to remain uncertain. Manufacturers welcomed the decision in the Autumn Statement to make full expensing permanent, which should provide a bit more impetus for investment plans. But tackling ongoing labour and skill shortages is still a top priority, starting with long-overdue reform of the Apprenticeship Levy."

Pantheon Macroeconomics said the survey continues to point to a further decline in manufacturing output over the coming months.

"The total orders balance rose to a three-month high, but it remained well below its average since 1977, -18. It also isn’t seasonally adjusted, and it tends to rise in December; our seasonally adjusted version increased by a smaller amount to -25, from -35," said senior UK economist Gabriella Dickens.