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Latest Industrial Trends Survey shows manufacturing output growth at record pace
UK manufacturing output volumes in the three months to June grew at the fastest pace on record (since 1975), according to the latest monthly CBI Industrial Trends Survey.
The survey of 304 manufacturing businesses reported output increasing in 15 out of 17 subsectors. Growth was driven by the motor vehicles & transport equipment and food, drink & tobacco subsectors.
Manufacturers expect output to grow at a quick pace in the coming quarter, albeit slightly slower than this month’s outturn. The improvement in demand conditions was also evidenced by total order books in June reaching their strongest outturn since 1988, while export order books improved to their firmest in more than two years.
Meanwhile, manufacturers reported that stock adequacy in June worsened to its weakest on record (since 1977). Additionally, output prices are expected to grow rapidly in the next quarter, with this month’s outturn marking the strongest expectations since 1982.
Anna Leach, CBI deputy chief economist, said: “The rebound in manufacturing activity has gathered pace in June, with output growth accelerating to its fastest pace on record and order books their strongest in over 30 years. Encouragingly, this performance is reflected in the majority of manufacturing sub-sectors and looks set to continue in the coming quarter.
“However, supply shortages continue to bite, and firms expect that to push through into prices in the months ahead. Businesses will be closely following the news on reopening, and will be looking to government to provide some clarity on longer-term requirements on workplace testing and social distancing. This will be crucial in enabling firms to plan ahead with confidence and plot a trajectory to full recovery.”
Tom Crotty, group director at INEOS and chair of the CBI Manufacturing Council, added: “It is hugely reassuring to see the manufacturing sector performing well after a particularly difficult start to the year. There is a real sense of optimism from many in the sector that there are good times ahead.
“However, the picture is not all rosy, with firms continuing to face difficulties arising from supply chain disruption and cost pressures. Staff shortages are also causing issues for many manufacturing businesses across the country. It will be critical for the government to continue to work with manufacturers to address these issues if the sector’s robust performance is to last over the long-term.”
Key findings of the latest monthly Industrial Trends Survey:
• Output volumes in the three months to June (+37% from +18% in May) grew at a survey-record pace (since July 1975).
• Output increased in 15 out of 17 sub-sectors, with headline growth being driven by the motor vehicles & transport equipment, and food, drink & tobacco subsectors.
• Manufacturers expect output to continue to grow at a quick, albeit slightly slower, pace in the next quarter (+33%).
• Total order books in June (+19% from +17% in May) hit their strongest outturn since May 1988 (long-run average of -14%).
• Export order books (-8% from -17% in May) improved to their strongest since April 2019 (long-run average of -18%).
• Output price expectations for the next three months (+48% from +38% in May) picked up to their strongest since January 1982.