UK manufacturing downturn continues as new orders slump, CBI data shows

Weak demand weighed on UK manufacturing activity over the past three months, with output volumes falling and new orders sinking at their fastest pace in more than five years, according to the Confederation of British Industry on Thursday.

According the CBI's Industrial Trends Survey for the three months to October, output volumes decreased at a similar pace to the three months to September, with the net balance for output (firms reporting an increase minus those reporting a decrease) at -16%.

Some 14 of the 17 industrial sub-sectors reported declines, with the metal products, metal manufacture and electronic engineering sectors experiencing the worst conditions.

New orders fell sharply, with both domestic and export orders dropping at their steepest rates since July 2020, with the net balance for new order volumes falling to -20% from -17%.

What's more, firms expect output volumes to reduce further in the coming three months as new orders continue to fall. As such optimism about general business conditions continued to deteriorate during the period, with export confidence weakening for the fifth straight quarter.

“Manufacturers are finding the going tough. Order books are weakening, cost pressures remain stubbornly high, and uncertainty is rising ahead of the Budget. This is making businesses increasingly reluctant to commit to new hiring and investment," said Ben Jones, the CBI's lead economist.

“To get manufacturing moving again, firms need to see the government accelerate energy cost support. That will help address a significant factor crippling the sector’s competitiveness. The Chancellor must also commit to no further business tax rises at the Budget and to boosting resources for exporters that will help firms maximise trading opportunities while raising productivity and growth.”