The latest results from the CBI Industrial Trends Survey (ITS) show that manufacturing output volumes continue to fall, resuming the downward trend that paused in July and with a further decline expected in the short term. Order books continue to be below “normal”, at broadly the same level as in the previous survey, although export demand weakened significantly.
Before we look at the results in a little more detail, you should note that although this survey is dated August, the data collection took place between 25th July and 15th August, so the results really cover the 3-month period from May to July (past) and August to October (future). A similar principle applies to the other months mentioned in this report.
The fall in output volumes was broadly based with 14 of the 17 sub-sectors seeing a reduction in the 3 months to “August”. The CBI report notes that the main drivers of the trend were “chemicals”, “paper, printing & media” and “metal products”.
Total order books continue to be reported as being below “normal” and at a level that is well below the long-run average. The overall level was similar to that in the “July” survey but this hides a significant weakening in export orders which went from roughly the long-run average to the weakest since “April”; this implies that domestic orders have improved although this is not specifically collected in the monthly ITS.
Stocks of finished goods were reported to be “more than adequate” in “August”, but less so than in “July” and at a rate that is now below the long-run average. Again, we can only imply a conclusion, but it suggests that respondents might need to look at expanding these resources if this trend continues to a point where stocks are less than adequate but this is not really supported by the output and orders data, either here or in the latest PMI figures.
You can get the Press Release of the CBI ITS from their website at www.cbi.org.uk/media-centre (21 August) or request it from MTA (we can also provide a summary of the results).