UK’s manufacturing output growth slows down in quarter to July




Output volumes and orders in the UK’s manufacturing sector have grown at a slow pace in the quarter to July after a period of solid growth last year. While growth has eased from the latest highs, average costs and prices continue to increase at a steep rate. Confidence among the players of the sector dipped for the third consecutive quarter.

Investment intentions have become better and employment within the sector maintained robust growth, but less rapidly than projected last quarter (for the third quarter running), according to a report. Moreover, worries about shortage of labour and components and materials remain strong but not as much as before.

Output volumes and orders in the UK’s manufacturing sector have grown at a slow pace in the quarter to July after a period of solid growth last year. While growth has eased from the latest highs, average costs and prices continue to increase at a steep rate. Confidence among the players of the sector dipped for the third consecutive quarter.

The CBI/Accenture Quarterly Industrial Trends Survey, conducted by UK business lobbying organisation Confederation of British Industry (CBI), is based on data collected from 237 manufacturing firms. The survey revealed that business sentiment fell for the third consecutive quarter, but at a slower pace than in April (-21 per cent from -34 per cent in the quarter to April). Output volumes in the quarter to July grew at the slowest pace since the quarter to April 2021 (balance of +6 per cent, compared with +25 per cent in quarter to June and a long-run average of +4 per cent), with a similar rate of growth expected in the three months to October (+6 per cent). Output rose in 10 out of 17 sub-sectors, with headline growth driven by food, drink and tobacco, and aerospace. Average costs in the quarter to July increased at a slightly slower pace compared with the previous quarter, but growth remained well above average (+82 per cent, compared with +87 per cent in April and a long-run average of +31 per cent).

Cost growth is expected to slow a little further in the quarter to October (+77 per cent). Domestic price growth in the quarter to July also eased slightly (+51 per cent, from +60 per cent in April; the long-run average is +13 per cent). Prices are expected to rise at a similar pace to the last quarter (+48 per cent) in the quarter ahead. Investment intentions for the year ahead picked up in comparison to April for plant and machinery (+17 per cent from +9 per cent), product and process innovation (+10 per cent from +1 per cent) and training (+10 per cent from -3 per cent). Investment in buildings is expected to fall slightly over the year ahead (-7 per cent from -6 per cent, though this remains above the long-run average of -17 per cent). Numbers employed grew at a similar rate to the previous quarter (+18 per cent from +21 per cent), with a similar rate of increase expected in the next three months (+19 per cent), as per the report.

“Manufacturers are still contending with sky-high costs and uncertainty, and while order books remain above normal for now, a continued easing in demand will test their resilience. There are strong signs that manufacturers are pursuing long-term strategies to see themselves through current volatility with investments in their people, plants, and machinery. Rather than pull back on innovation, investing in technology will help to improve productivity, keep costs down, and unlock new ways to make products more effectively,” said Maddie Walker, head of industry X in the UK at Accenture.

Fibre2Fashion News Desk (NB)





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