Updating the figures that we shared at the Spring Update yesterday, the latest CBI Industrial Trends Survey (ITS) shows that while investment intentions remain weak, this was less so than in the January survey at -33 (from -41). The percentage of firms working below capacity increased slightly but the 4-quarter rolling trend eased again.
Throughout this report, we need to note that although it is labelled as “April” and “2nd Quarter”, this is the month of publication and data collection took place between 25th March and 14th April; therefore, these results really refer to March, with the three-month blocks corresponding to the calendar quarters (Q1-25 up to “April” and Q2-25 for the future).
The results show that manufacturing output volumes were flat in the “quarter to April” having fallen in the 3 months to March but this implies no change to a weak level, so the good news is that they don’t appear to be falling any further. This was achieved despite 14 of the 17 sub-sectors showing lower output volumes which was largely offset by significantly higher output in the “motor vehicles & transport equipment” industries.
Bearing in mind the data collection period, it will be crucial to see if this is continued next month given the impact on this group (especially the automotive part) from the US tariffs. In part this is shown by firms expecting output volumes to fall marginally in the 2nd quarter.
Respondents reported that new domestic orders fell over the past quarter (Q1-25), with export orders also down but only marginally. While noting that the CBI survey is quarterly, this is in marked contrast to the latest manufacturing PMI figures for the UK which we report elsewhere in this bulletin.
Turning back to the quarterly indicators, given that general business optimism continued to deteriorate in this survey and the vastly increased uncertainty over the US tariff regime, it is modestly encouraging that the percentage balance (“up” minus “down”) for investment intentions for plant & machinery over the coming year was less weak than in the “January” survey. This moved to -33, having been at a 4½ year low of -41.
Not surprisingly, there was a sharp increase in the percentage of respondents who said that uncertainty about demand was the main restriction to investment – apart from the same level in the “January 2024” survey, this was at its highest since the second Covid spike in “January 2021”. There was little change in the reasons for investment but it is worth noting that the need to expand capacity, while still well below its long-run average, edged up just enough to be regarded as notable rather than natural variation.
Looking at our key industries responses to the investment intentions question, they all remain negative; while metal products was unchanged at -26, both transport equipment (now -11, from -53 in the previous survey) and mechanical engineering (-30 from -51) were significantly less weak than in the previous survey.
The capacity measures in the latest survey were slightly contradictory; the main measure we use is the percentage of firms working below capacity (in our forecast reports, we use the inverse of this) and this increased slightly to 67, which is its highest level for a year. However, this was lower than in “April 2024”, so the 4-quarter moving average increased again to 38 – the chart in the forecast presentation showed this at 36 for “Q1-25”.
However, there is another question in the CBI survey that asks if firms have adequate capacity meet expected demand. It is noticeable that this fell from 90 in the “January” survey to 85 in the results published yesterday; this contrasts with our usual measure and may be what lies behind the increase in companies saying that they need to invest to expand capacity.
The CBI press release on these survey results is available on their website at https://www.cbi.org.uk/media-centre/ (24 April) or we can let you have a copy of the summary of the results and some charts around the investment intentions data.