UK manufacturing output expectations fall in face of COVID-19 outbreak

In the three months to March 2020, manufacturing output expectations in the UK 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 monthly Industrial Trends Survey by the Confederation of British Industry (CBI). The survey was 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 seventeen subsectors reported output volumes expanding. The three subsectors leading this trend were chemicals, food, drink and tobacco, and electronic engineering. However, growth in these sectors was offset primarily by a sharp drop in output in the motor vehicles and transport equipment subsector.

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.

“Unprecedented challenges”

CBI Deputy Chief Economist Anna Leach commented: “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 that 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.”

“Inspiring reaction by manufacturers”

Tom Crotty, Group Director of INEOS and Chair of CBI Manufacturing Council, said: “Given the hugely challenging circumstances faced by all businesses across the country as a result of coronavirus, it is not surprising that manufacturers are also feeling the impact. The government’s various support measures have been welcome, but it will be essential to keep its response under continuous review to ensure that firms get through the crisis.

“The outbreak of coronavirus has shone a light on the world-leading expertise and capability of UK manufacturing. The inspiring reaction by manufacturers to the government’s drive to produce thousands of ventilators and other essential products and materials is testament to the quality of firms and people in our sector. Manufacturers stand ready to help the country through the current crisis in any way they can.”

Click here for further details from the survey findings.

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