Manufacturing output expectations fall amidst COVID-19 outbreak
Manufacturing output expectations dropped to their weakest since the financial crisis, as the COVID-19 outbreak gained pace in the UK and Europe. That’s according to the latest CBI monthly industrial trends survey conducted between 25 February and 13 March.
In another early sign of the impact of the pandemic, the survey of 288 manufacturers reported that both total and export order books worsened considerably on February.
Manufacturing output volumes fell in the three months to March, but at a roughly similar pace to February. This marks the sixth month in a row of falling output in the sector. Nine out of the 17 sub sectors reported output volumes expanding, led by the chemicals, food, drink and tobacco, and electronic engineering sub-sectors. However, growth in these sectors was offset primarily by a sharp drop in output in the motor vehicles & transport equipment sub-sector.
Respondents also stated that stock adequacy for this month was roughly in line with its long-run average. Output prices are expected to rise somewhat in the next three months.
Anna Leach, CBI deputy chief economist, said: “The manufacturing sector is facing unprecedented challenges due to COVID-19, such as widespread disruption to supply chains and weakening demand due to domestic containment measures.
“With expectations for output set to fall in the coming months, it’s now more important than ever manufacturers get the support they need.
“The Chancellor’s offer of substantial payroll support, fast access to cash and tax deferral will help prevent job losses and alleviate some strain. But all measures must be constantly assessed to ensure the UK’s manufacturing sector emerges from this crisis with the minimum possible damage.”