Cost and pricing pressures in UK manufacturing remain high, but shows signs of easing, according to the CBI’s latest Industrial Trends survey.
In the quarter to January, average unit costs grew at the slowest pace since April 2021, while domestic selling price inflation was the slowest since July 2021. But both remained far above their long-run averages.
Manufacturers reported stable output volumes in the quarter to January, following a modest decline in the quarter to December. New orders were flat, while the volume of total order books fell further below normal, suggesting that output has been supported in part by manufacturers tackling backlogs of work. Looking ahead, manufacturers expect new orders and output volumes to increase in the next quarter, but the share of firms reporting that orders or sales would constrain output nonetheless reached its highest since April 2021.
Anna Leach, CBI Deputy Chief Economist, said: “Mixed conditions are apparent in the manufacturing sector this month. Global supply chain pressures, labour shortages and energy costs are easing, enabling unit cost growth to ease back from record highs.
“But there are signs that demand is easing too, with order books weakening sharply, spare capacity in the manufacturing sector rising and the share of firms citing the strength of sales or orders as a potential constraint on output rising to its highest in almost two years.”
