CBI Industrial Trends Survey August 2024

Manufacturers reported that output volumes fell in the three months to August, according to the CBI’s latest Industrial Trends Survey (ITS). Manufacturers expect output to rise modestly in the three months to November, but expectations have softened compared with last month.

Total order books improved in August but continued to be reported as below “normal” and remain below their long-run averages. Stock adequacy (for finished goods) rose, to stand marginally above its long-run average. Meanwhile, expectations for selling price inflation accelerated, having slowed to a three-and-a-half-year low last month.

The survey, based on the responses of 222 manufacturers, found:

• Output volumes fell in the three months to August after being broadly unchanged in the quarter to July (weighted balance of -9%, from -3% in the three months to July), the first decline since March. Output is expected to rise modestly in the three months to November (+9%), but expectations have diminished compared to last month (+25% in July, which were the strongest in two years).

• Output fell in 10 out of 17 sub-sectors in the three months to August, with the decline driven by the furniture & upholstery, glass & ceramics, and electrical goods sub-sectors.

• Total order books were reported as below “normal” in August but improved relative to last month (-22% from -32%). The level of order books remained below the long-run average (-13%).

• Export order books were also seen as below normal and deteriorated slightly relative to last month (-22% from -18%). This was also below the long-run average (-18%).

• Expectations for average selling price inflation accelerated in August (+15%, from +2% in July)— above the long-run average (+7%).

• Stocks of finished goods were seen as more than “adequate” in August (+15%, from +10% in July), broadly in line with the long-run average (+12%)

Ben Jones, CBI lead economist, said: “The stop-start recovery seen in recent months continued in August, with output volumes falling for the first time since March and order books remaining below average.

“But it’s encouraging that manufacturers still remain confident that output will tick up over the autumn, despite expectations for growth diminishing from a two-year high last month.

“Firms want to see action from the new government to shore up demand and give businesses a reason to grow. This autumn’s Budget is an ideal opportunity for the chancellor to announce a variety of measures like long overdue reform to business rates, a business tax roadmap which would simplify the landscape & incentivise private investment and a bold industrial strategy which can relaunch the UK as the home for businesses who want to invest.”