Monday, January 18, 2021

Manufacturing demand slumps as activity remains weak

Manufacturing output volumes in the three months to November fell at their slowest pace since September 2019, but the pipeline for activity – including output expectations and order books – weakened in October. That’s according to the latest CBI monthly Industrial Trends Survey.

The survey of 277 manufacturers found that output volumes declined in 9 of 17 sub-sectors, with the headline drop in output driven by the aerospace manufacturing sub-sector.

Total and export order books both weakened in October, remaining substantially weaker than their long-run averages.

Looking ahead, firms anticipate that output will decline at a slightly faster pace over the next three months. This marks a worsening in expectations compared to last month’s survey. Manufacturers also expect output prices to fall over the next three months.

Anna Leach, CBI Deputy Chief Economist, said: “Output volumes have declined at their slowest pace in over a year in our November survey. But order books have softened again as global demand has been hit by intensified lockdowns, and manufacturers have trimmed their expectations.

“Firms have done all they can to adapt their operations to the current conditions, but pressure remains intense. The extension of government support – notably the Job Retention Scheme – is very welcome.

“Key to stabilising trading conditions for manufacturing firms will be getting the pandemic under control through further investment in mass testing, ensuring a seamless test and trace system, and an efficient vaccine rollout.”

Tom Crotty, Group Director at INEOS and Chair of the CBI Manufacturing Council, said: “These results show what we already know – that manufacturers up and down the country are continuing to face very difficult circumstances as we move into the winter.

“Looking ahead, manufacturers have a crucial role to play in working with the government to build its green industrial revolution, improve productivity and level-up regions. Government support for the sector has therefore been – and will continue to be – vital in keeping firms going through the crisis.”

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