Manufacturers report weakening in total and export orders

UK manufacturers reported a deterioration in both their total and export order books in August, while expectations for output growth have flattened, according to the CBI.

Of the 456 manufacturers responding to the latest monthly Industrial Trends Survey, 15 percent reported that order books were above normal, while 36 percent stated that order levels were below normal. The balance of -21 percent represents the lowest return since the end of last year (December -23 percent).

Similarly, export orders have weakened with manufacturers reporting a balance of -17 percent. While still above the long-run average of -21 percent, this is the lowest figure reported since January 2012 (-26 percent).

Prospects for manufacturers and output growth over the course of the next three months have also softened. Output is expected to be flat over the next three months (0 percent), following two previous surveys in which manufacturers expected output to increase (June + seven percent, July +11 percent).

Output prices are also expected to be flat over the coming quarter for the third-consecutive month, with a balance of + one percent.

Stock levels are below average, with a balance of + nine percent saying stocks are at least adequate to meet demand, the lowest figure since June 2011 (+ three percent).

Anna Leach, CBI Head of Economic Analysis, says overall demand for manufactured goods has eased back in August led by a weakening in the consumer goods sector following a strong July figure: “This sector also contributed to the weakening in output expectations for the next three months, alongside investment goods.

“The economic environment for UK manufacturers remains challenging, with domestic demand relatively muted and the ongoing Eurozone crisis now seeming to drag on broader global economic momentum.”