Industrial Trends Survey

Posted on 23 Apr 2009 by The Manufacturer

Demand for goods bottoms out in Q1 and factory output reflects it, says CBI.

UK manufacturers are experiencing their worst level of demand in 30 years and have ground production to a halt as a result, according to the Confederation of British Industry’s (CBI) Industrial Trends Survey for the first three months of 2009.

Overall, 60% of firms reported a fall in the volume of new orders compared with the previous quarter, and 13% reporting an increase. The resulting balance of -47% is the lowest since 1980. Both domestic and exports orders contributed to the fall with the former registering -52% amd the latter -39%.

Output fell with a balance of -53%, its worst result since records began in the category in 1975. Over three-quarters of firms responding to the survey said their factories are now running below capacity.

The CBI says 62,000 jobs were lost from the sector in Q1 and expects a further 51,000 to be lost between April and June. That will bring the total number of employees in the UK manufacturing industry down to a little over 2.6 million.

“The first quarter of 2009 was extremely tough for UK manufacturers but this survey shows firms hope that the worst may be behind them, with the pace of decline slowing slightly,” said CBI chief economic adviser

“Firms have run down their stocks more sharply this quarter, as demand and output have collapsed, but stock levels are still considered too high. Job losses have been steep, and training and investment plans scaled back significantly.

However, in a glimpse of light indicating the end of the tunnel might be coming into view, McCafferty said expectations for the next three months represent an improvement.

“Firms are hopeful that the pace of decline in manufacturing activity will moderate slightly in the next three months, and general sentiment is falling less rapidly for the first time in seven quarters,” he said.

Estimates for the next quarter are -40% for domestic demand, -18% for export orders and -39% for employment.