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Manufacturing output 'stalls for first time in two years'

23 Sep 2015

Manufacturing output growth stalled in September – the first time it has done so for two and a half years - according to the Confederation of British Industry (CBI).

In the latest CBI Monthly Industrial Trends Survey of 491 manufacturing businesses, 26% reported that output grew in the three months to September, while 25% said it decreased. That gave a rounded balance of 0%, slightly below the long-run average (+3%).

Although manufacturing output is expected to grow slightly next quarter, the survey found that manufacturers’ expectations for growth in the volume of output over the coming three months are the weakest since October 2013.

Total orders and export orders declined, with exports falling back to the lowest level in six months. 18% of firms said their export order books were above average, while 31% said they were below, giving a balance of -24%.

Manufacturers also reported that they expect average prices to fall in the next three months (a balance of -8%).

Rain Newton-Smith, CBI Director of Economics, said: ‘Exports are the missing link in the UK recovery at the moment, with the strong pound squeezing manufacturers’ margins, even though lower commodity prices are helping to ease cost pressures.

‘Meanwhile manufacturers will have an eye on China’s slowdown and its effect on neighbouring markets.

‘Boosting our export performance, alongside innovation, is vital to improving productivity. That’s why businesses want the Government to protect export and innovation spending, alongside other growth-boosting areas, in the Comprehensive Spending Review.’