Manufacturing output volumes fall in three months to September

Manufacturing output volumes fell in the three months to September, although at a slower pace than the three months to August – according to the CBI’s latest Industrial Trends Survey (ITS). Manufacturers expect volumes to fall at a broadly similar pace in the three months to December.

Expectations for selling price inflation eased in September, with the expected pace of growth in selling prices over the coming quarter the weakest since October 2024, and below the long-run average.

Total and export order books were both reported as below “normal” and were below their long-run averages. Stocks of finished goods were more than adequate in September, in line with the long-run average.

The survey, based on the responses of 290 manufacturers, found:

• Output volumes fell in the three months to September, after falling at a sharp pace in the three months to August (weighted balance -13%, from -22% in the quarter to August). Manufacturers expect output volumes to decline again in the three months to December (-14%).
  • Output decreased in 13 out of 17 sub-sectors in the three months to September, with the fall in output being driven by the chemicals, metal products and mechanical engineering sub sectors.
• Total order books were reported as below “normal” in September (-27%, from -33% in August). The level of order books remained significantly below the long-run average (-14%).
• Export order books were also below “normal”, to a similar extent as August (-32%, from -33% in August). The balance also stands below the long-run average (-19%).
• Expectations for average selling price inflation eased in September (+4%, from +9% in August).  Selling price expectations have eased considerably since a recent high in January (+27%) and stand at their lowest since October 2024 (0%).
• Stocks of finished goods were reported as more than “adequate” in September (+12%, from +7% in August) and stand in line with the long-run average (+12%).

Ben Jones, CBI Lead Economist, said: 

“Manufacturers report a mix of pressures weighing on the sector: high energy costs, uncertainty over taxation and economic policy, and ongoing difficulties in accessing skilled labour. In this environment, planning for growth is extremely challenging, and this is feeding through to weaker orders, output and investment. While the pace of decline has eased, conditions look set to remain tough through to the end of the year.

“Businesses across the board are looking ahead to the November Budget with hope that it delivers meaningful action to ease cost and regulatory pressures. Without that clear policy direction, confidence will continue to ebb and firms will find it increasingly difficult to invest, hire and grow. They also hope to see the government use the coming weeks as an opportunity to refine the Employment Rights Bill so that a pragmatic and workable landing zone that avoids unintended consequences for growth can be found."