Although output is expected to rise in the three months ahead, the share of firms citing weak orders or sales as a constraint on output rose to its highest since January 2021.
Growth in average costs eased significantly in the quarter to October, to its slowest pace in three years. The pace of growth in both domestic and export selling price inflation also weakened over the past quarter.
Numbers employed fell for the first time since January 2021. Investment in tangible assets (machinery, equipment, buildings, etc) is expected to fall in the year ahead, though manufacturers expect investment in intangibles (innovation and training) to increase slightly.
The survey, based on the responses of 253 manufacturing firms, found:
- Output volumes fell in the quarter to October, though less steeply than in the three months to September (balance of -6% from -10% in the three months to September). Firms expect volumes to rise in the next three months (+15%).
- Total new orders were unchanged in the quarter to October (balance of +2% from -6% in July), and manufacturers expect orders to remain unchanged over the next three months (-1%).
- Growth in average costs per unit of output eased significantly in the quarter to October, with costs rising at their slowest pace in three years (balance of +29%, from +57% in July). Costs growth is expected to be broadly similar in the quarter to January (+33%, the weakest expectations for three years).
- Growth in domestic selling prices slowed in the quarter to October (balance of +5%, from +18% in July) as did export price inflation (+10%, from +16%). Looking ahead to the next three months, a similar rate of domestic price growth is expected, as export price growth is expected to remain elevated (+13%).
- Numbers employed fell marginally in the three months to October (-9%, from +4% in July) for the first time since January 2021. Firms expect numbers employed to be unchanged in the next three months (+2%).
Anna Leach, CBI deputy chief economist, said: “The warning lights are flashing red in our latest manufacturing survey, with business sentiment deteriorating, output volumes falling and manufacturers becoming more cautious over their employment and investment plans.
“Amidst a difficult environment for manufacturers, the Chancellor should use the Autumn Statement to build confidence and get the sector firing again, through a focus on skills development, encouraging business investment and grasping substantive net zero opportunities.”
