Manufacturing output fell slightly in the quarter to February, but at a more modest rate than in the first lockdown last Spring, according to the latest CBI Industrial Trends Survey.
The survey of 296 manufacturers also found that output increased in 11 of the 17 sub-sectors. However, growth in these sub-sectors was outweighed by sharp falls in others – particularly motor vehicles & transport equipment and food, drink & tobacco.
Looking ahead, manufacturers anticipate output to be broadly flat over the next three months, marking a notable improvement on expectations of a significant decline in January.
Total orders books improved, to a similar position as in December 2020, while export order books worsened on January. Both continue to be far weaker than their respective long-run averages.
Manufacturers also reported that stock adequacy weakened slightly from January and expect output prices to be broadly steady in the next quarter.
Alpesh Paleja, CBI Lead Economist, said: “Manufacturing activity remains patchy, but so far appears to have taken a smaller hit than in previous lockdowns. However, a stubbornly mixed picture persists among the different manufacturing sub-sectors, pointing to the asymmetric impact of restrictions.
“With some much-needed clarity coming down the track in the Government’s roadmap for easing lockdown, it is vital that manufacturers are supported beyond April, in line with the restrictions that will remain.
“Immediate steps to extend the Job Retention Scheme and deferring VAT repayments until the end of June are essential, alongside business rates relief to protect jobs.
“In the upcoming Budget, wider reform of our outdated business rates regime is vital, to curb cost pressures on firms and stimulate business investment, which is a key ingredient in our economic recovery.”
Tom Crotty, Group Director at INEOS and Chair of the CBI Manufacturing Council, said: “The start of 2021 has been tough for manufacturers as firms acclimatise to life outside the EU and grapple with the challenges of lockdown.
“As we look ahead to the future, there is an incredibly exciting opportunity for the government to work with firms to help shape a manufacturing sector that is capable of driving the UK’s post-COVID economic recovery.
“In the meantime, however, it’s important that the sector continues to have access to the support it needs to get through the next few difficult months.”