UK Manufacturing Output Falls, Expected to Remain Stagnant, Reveals CBI Survey
Manufacturing output in the UK declined over the three months leading up to September and is predicted to remain stagnant for the rest of 2023, according to a survey conducted by the Confederation of British Industry (CBI). These findings further indicate signs of weakness in the country’s economy.
The CBI’s net balance of output for the third quarter stood at -10, showing a slight improvement from the -19 recorded in the previous three months until August. However, it still remains significantly below the series average of +3 and represents the lowest reading since September 2020.
The net balance is derived from the difference between the proportion of factories reporting a rise in output versus those witnessing a decline.
Anna Leach, the CBI’s deputy chief economist, expressed concern over the weakened output in the manufacturing sector. She stated, “Output in the manufacturing sector weakened over the past quarter and is expected to flatline at best through the rest of this year.”
The CBI survey also revealed a slight decline in the measure of order books, which dropped from -15 to -18 over the same three-month period. This figure aligns with the median forecast in a Reuters poll of economists.
The Bank of England, taking note of signs of an economic slowdown, recently halted its series of interest rate increases.
The survey further disclosed that, after eight consecutive months of diminishing inflation expectations among manufacturers, selling price expectations picked up for the three months until December. However, they only rose slightly from the previous month’s survey, which had recorded the lowest figures since early 2021.
The CBI survey was conducted between August 24 and September 12, with 292 manufacturing firms participating.
Experts suggest that this latest report adds to the growing concerns about the state of the UK economy, with several key indicators indicating a slowdown. The decline in manufacturing output, along with the stagnation expected in the coming months, has raised questions about the country’s ability to rebound from the ongoing challenges posed by the Covid-19 pandemic and supply chain disruptions.
The manufacturing sector plays a crucial role in the UK economy, accounting for a significant proportion of its overall output. Therefore, any setback in this sector can have serious repercussions for the nation’s economic growth and recovery.
The CBI survey’s findings have come at a time when the Bank of England has decided to pause its series of interest rate increases, as policymakers monitor the impact of recent developments on the country’s economy.
As the UK faces numerous challenges in navigating the post-pandemic landscape, including rising energy prices, labor shortages, and ongoing global supply chain disruptions, policymakers and industry leaders are looking for solutions to support the manufacturing sector and ensure sustainable economic growth.
The government’s focus on investment in skills and technology, along with efforts to bolster productivity and strengthen supply chains, will be crucial in reviving the manufacturing sector and driving economic recovery in the months ahead.
Overall, the CBI survey highlights the current challenges faced by the UK manufacturing industry and underscores the need for proactive measures to address the issues and support the sector’s growth.
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