Manufacturing predictions best for a year

Posted on 19 Aug 2009 by The Manufacturer

UK manufacturers’ outlook for production over the next three months is the least negative since June 2008, the Confederation of British Industry said today (Wednesday).

In the CBI’s latest industrial trends survey 32% of UK manufacturers said they expected output volume to fall over the next three months, while 27% said it should increase. The resulting balance of -5% is the least negative prediction since June 2008 (+2%) and was touted as evidence by the CBI that destocking initiatives are coming to an end.

A balance of just 13% of firms now says that stocks are more than adequate to meet demand.

Demand remains very weak however, with a balance of 54% of manufacturers reporting that total order books are below normal. This marked the seventh consecutive month that orders have remained significantly below par.

Export order book levels have also remained feeble, despite the relative weakness of Sterling, with a balance of 48% reporting them to be below normal.

“Manufacturers are facing weak demand at home and abroad, and their order books continue to look anaemic,” said Richard Lambert, CBI Director-General.

“More positively, expectations for manufacturing output over the coming three months are the least negative in over a year. This is partly because many firms have run their stock levels down quite aggressively over the summer, so some manufacturers are now looking to raise production.”

Deloitte’s David Raistrick labeled the survey findings as “positive news” which “will hopefully result in a stabilisation of production.”

He said: “While the manufacturing sector still faces a very challenging environment, recent reports suggest that the industry may have passed the worst and is on the slow road to recovery. Production figures, while still negative, are the most positive they have been in over 12 months which should boost confidence in the sector.”

Manufacturers are still expecting to lower domestic prices over the next quarter, but the pace of these anticipated price falls (a balance of -10%) has eased slightly from July (-17%).