UK manufacturing output and orders remained stable in the three months to January, while average unit costs grew at the slowest pace since April 2021, the latest monthly Industrial Trends Survey from the Confederation of British Industry, or CBI, and Accenture days showed.
Output volumes were almost stable in the quarter to January, with a weighted balance of -1 percent versus -9 percent in the three months to December. The survey showed that firms expect volumes to increase briskly in the next three months.
Total order book balance fell further below normal to -17 percent from -6 percent in October, suggesting that output has held up in part due to manufacturers tackling backlogs of work. Economists had expected a balance of -8. However, manufacturers expect new orders to rise over the next three months with a balance of +9 percent.
Average cost growth remained exceptionally strong in the three months to January, but the rate of inflation was the slowest since April 2021. The corresponding balance eased to 64 from 82.
The slowdown in inflation from record highs was attributed to an easing trend in global supply chain pressures, labor shortages and energy costs.
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“But there are signs that demand is easing too, with order books weakening sharply, spare capacity in the manufacturing sector rising and the share of firms citing the strength of sales or orders as a potential constraint on output rising to its highest in almost two years ,” Anna Leach, CBI Deputy Chief Economist, said.
Looking ahead, cost growth is expected to slow further in the quarter to April and the corresponding survey balance was 53.
Domestic selling price inflation was also the weakest since July 2021, but it is expected to rise in the upcoming quarter.
Business confidence and export optimism continued to deteriorate, but less intensely than in the previous survey, though firms expect staff levels to rise in the next three months.
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