Manufacturing output growth remains robust

Published:  01 March, 2018

Output grew at a healthy pace in the three months to February, according to the latest monthly CBI Industrial Trends Survey of 397 manufacturers.

Growth was broad-based with output growing in 16 out of 17 sub-sectors with growth predominantly driven by Food, Drink and Tobacco, and Motor Vehicle and Transport Equipment sub-sectors. Respondents anticipate that output growth will slow a little over the next three months, broadly matching the pace seen in September and October last year.

Expectations for output price inflation weakened from last month’s 34 year high, but remain above the historical average. Meanwhile, stocks were considered to be above adequate levels, but below the long-run average.

Demand in the manufacturing sector should continue to be buoyed by the lower Pound and buoyant global economy. But the CBI expects consumer-facing companies and retailers to continue to struggle while consumer incomes remain under pressure from higher inflation.

Anna Leach, CBI head of economic intelligence, said: “This month saw another strong showing from UK manufacturers. Although order books weren’t quite as buoyant as they were last month, demand remains strong and output grew briskly.

“With the Brexit negotiations reaching a critical juncture, many businesses are concerned about future barriers to trade and are looking for clarity over the future relationship with the EU. Remaining in a comprehensive customs union will help alleviate some of those fears and give firms the confidence to invest and grow.”

Tom Crotty, group director of Ineos and chair of CBI Manufacturing Council, added: “Manufacturers are benefitting from the health of the global market place. But companies still struggle to find the workers they need to grow their business. To ensure there’s a strong pipeline of people with the technical skills needed, we need young people to receive further education and careers advice built upon the needs of employers.”

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