Manufacturing order books saw a noticeable improvement in August according to the CBI’s latest Industrial Trends Survey (ITS), following a sharp deterioration over April-July. Total order books were reported as below “normal” to the least extent since November 2024, with export order books recovering to “normal” for the first time in over four years.
Output volumes fell again in the three months to August, but at a slower pace relative to July. Manufacturers expect the pace of decline to slow further in the three months to November. Selling price expectations strengthened in August, relative to July, and remain above historical norms. Stocks of finished goods were seen as adequate in August, standing slightly above the long-run average.
The survey, based on the responses of 273 manufacturers, found:
- Output volumes fell in the three months to August, at a slower pace relative to the quarter to July (weighted balance of -17%, from -24% in the quarter to July). Although manufacturers expect output volumes to fall again in the three months to November (-7%), expectations were the least negative since the beginning of the Iran War.
- Output fell in 12 out of 17 sub-sectors in the three months to August, with the fall being driven by the metal products, food, drink & tobacco, chemicals and electronic engineering sub-sectors.
- Total order books were reported as below “normal” in August, but to the smallest extent since November 2024 (-25%, from -45% in July). Total order books nonetheless remain below their long-run average (-14%).
- Export order books were reported as “normal” in August, for the first time since June 2022 (0%, from -33% in July), driven by improvements in the chemicals, other manufacturing and electrical goods sub-sectors The level of export order books stands well above the long-run average (-19%).
- Expectations for average selling price inflation remained elevated in August, strengthening relative to July (+22%, from +11% in July). Expectations for selling price growth remain above the long-run average (+8%).
- Stocks of finished goods were reported as adequate in August (+15%, from +19% in July), remaining slightly above the long-run average (+12%).
Cameron Martin, CBI Senior Economist, said:
“Stronger global demand is providing some welcome relief for manufacturers, with export order books improving sharply and lifting overall orders. Firms also expect output to fall at a much slower pace over the next three months.
“However, it is too soon to know whether this marks the beginning of a sustained shift in conditions, particularly given ongoing cost pressures reported by manufacturers, with selling price expectations in our survey picking up again and remaining well above historical norms.
“The forthcoming Autumn Budget must avoid creating unnecessary uncertainty or adding extra costs that could put at risk the improvement in expectations. Instead, the government should use the Budget to build on efforts to restore competitiveness – delivering the British Industrial Competitiveness Scheme, while going further to support reindustrialisation by reducing policy-driven energy costs for all businesses across the country.”
