UK manufacturing sector finishes 2019 on a low note

UK manufacturers’ total order books remained weak in the three months to December 2019, while export order books worsened compared with November. Both total and export order books remained below their long-run averages. Those were the chief findings of the latest Industrial Trends survey by the Confederation of British Industry (CBI).

The survey of 289 manufacturers found that output volumes in the three months to December fell at the quickest rate since the financial crisis (September 2009), with output expanding in only six out of 17 subsectors. The headline fall in output was primarily driven by the motor vehicles subsector, chiming with the recent weakness in global car sales. Meanwhile, the main positive contributor to output volumes was the electronic engineering subsector, alongside a boost from aerospace output. Looking ahead, firms expect that output volumes will fall at a slower pace in the first quarter of 2020.

Manufacturers reported that stocks of finished goods rose further above “adequate” levels from November. In addition, firms expect output prices to pick up somewhat in the next three months.

“Firms will be looking for reassurance”

CBI Deputy Chief Economist Anna Leach commented: “With manufacturers reporting that output is declining at a pace not seen since the financial crisis, alongside another month of softer order books, it is crucially important to rebuild business confidence in this sector.

“After three years of gridlock, the Prime Minister now has a clear mandate to govern. Businesses across the UK will want him to break the cycle of uncertainty. Firms will be looking for reassurance of the new Government’s commitment to getting the UK economy fighting fit as it prepares to exit the EU.”

Fresh opportunity to solve long-term challenges

Tom Crotty, Group Director, INEOS and Chair of the CBI Manufacturing Council, said: “These disappointing figures are reflective of the widespread weakness in the global manufacturing sector and the impact of continued Brexit uncertainty in the run-up to the General Election.

“Following the General Election, manufacturers will be eager to see the Prime Minister break the cycle of Brexit uncertainty as a priority. There is also a fresh opportunity for the sector to work with the government to solve long-term challenges such as raising productivity, addressing skills shortages, improving sustainability and tackling climate change.”

Click here for further details about the survey results.

Is your company well prepared for the day the UK leaves the EU? For advice on getting your business fighting fit for whatever lies ahead, email me or call me on 020 7099 2621.