Manufacturing output bounces back in November

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Manufacturing
Tom Crotty

Manufacturing output growth picked up in the quarter to November, and firms saw overall order books rebound from October’s fall, according to the latest monthly CBI Industrial Trends Survey.

The survey of almost 400 manufacturers found that output volume growth accelerated in the three months to November, outpacing the long-run average. Output expanded in 13 of the 17 sub-sectors, with growth driven by the food, drink & tobacco, motor vehicles and transport equipment, and chemicals sub-sectors. Firms expect output growth to slow somewhat over the next quarter.

Meanwhile, total order books strengthened in November after worsening in October, and were more robust than the long-run average. Export order books improved marginally following a weakening in October, and, likewise, remained stronger than the historical average.

Average selling prices were expected to increase at a steady pace, above the long-run average, while stocks were considered to be marginally above adequate levels, but below the long-run average.

The CBI expects UK manufacturers to continue benefitting from ongoing global economic expansion and a lower sterling exchange rate, but overall economic growth is expected to remain subdued, reflecting weak household income growth and the drag on investment from Brexit uncertainty.

Rain Newton-Smith, CBI Chief Economist, said: “It’s encouraging to see an improvement in the manufacturing sector after October’s stark survey, with order books and output growth on the up.

“But the future prosperity of manufacturers depends on getting the Brexit deal right. The overwhelming message from business to the Government is to make progress, don’t go backwards.

“We need frictionless trade for our world-beating manufactured goods and a transition period which draws us back from the cliff edge. Anything less than that and jobs and investment could suffer.”

Tom Crotty, Group Director of INEOS and Chair of CBI Manufacturing Council, said:“Improvements in output volumes and overall order books will come as some relief for manufacturers following a weaker outturn in October. Firms will have also broadly welcomed the Autumn Budget, especially the progress on Apprenticeship Levy reform.

“Manufacturers’ top priority unsurprisingly continues to be for the Government to secure frictionless trade and a Brexit transition period. The sector will also be urging the Government to rethink its proposed approach to immigration policy, which, by placing tight restrictions on low-skilled labour, would have a particularly negative impact on manufacturers.”