Manufacturing output stabilises but orders remain subdued
In the concluding quarter of 2023, the manufacturing sector has shown resilience with production levels holding steady for the first time since July 2023, as per the latest CBI Industrial Trends Survey. Looking ahead, manufacturers are cautiously optimistic, expecting a slight uptick in production in the coming quarter.
Despite this positivity, challenges persist. December witnessed orders, both domestic and international, trailing below the average, albeit with a marked improvement from previous lows. This scenario underscores a gradual alignment of price increase expectations with long-term averages, driven by a combination of subdued demand and improved supply conditions.
A closer look at the survey, which captured insights from 237 manufacturing firms, reveals a nuanced picture. While six out of seventeen industry sub-sectors reported a growth in output, including key areas such as food, drink, tobacco, and electrical goods, others faced declines, highlighting the sector’s mixed fortunes.
The inventory levels, considered more than adequate in December, coupled with the weakest selling price expectations since February 2021, signal a cautious optimism among UK manufacturers. However, the path ahead is fraught with challenges, including the impact of global economic slowdown, high interest rates, and persistent domestic inflation.
As we navigate through these uncertain times, the recent Autumn Statement’s decision to permanently allow full expensing emerges as a silver lining, potentially boosting investment plans. Yet, the pressing issue of labour and skill shortages remains, calling for a strategic overhaul of the Apprenticeship Levy.
The UK manufacturing landscape stands at a critical juncture, reflecting a blend of cautious optimism and inherent challenges.
For a detailed analysis, visit the CBI website: Manufacturing output stabilises but orders remain subdued – CBI Industrial Trends Survey.
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