Optimism among UK manufacturers dipped slightly in July after a brief resurgence in April, according to the Confederation of British Industry’s (CBI) latest quarterly Industrial Trends Survey. Output volumes remained steady, matching the previous quarter’s performance but falling short of expected growth. Despite this, manufacturers anticipate the strongest output growth since March 2022 over the next three months.
In the quarter to July, output volumes had a weighted balance of -3 percent, compared to +3 percent in the previous three months. Forecasts for the next quarter are optimistic, with a growth balance of +25 percent, the highest since March 2022. Six out of 17 sub-sectors reported growth.
Total new orders fell in July, continuing the trend from the previous quarter, with a balance of -9 percent compared to -6 percent. Domestic orders dropped by -15 percent from -6 percent, while export orders remained stable at +3 percent. Manufacturers expect new orders to stabilize next quarter. Business sentiment dipped in July with a balance of -9 percent from +9 percent, while export optimism remained flat at 0 percent.
Investment plans for the year ahead improved, with product and process innovation reaching +18 percent from +15 percent. Investments in training, retraining, and plant and machinery also rose. However, investment in buildings is projected to decline. Average costs surged to +52 percent from +39 percent, with a slight reduction expected next quarter. Both domestic and export prices increased but are expected to decelerate.
Employment levels remained unchanged in the quarter to July, following a previous decline. A moderate rise in employment is anticipated over the next three months at +16 percent.
CBI lead economist Ben Jones noted that while sentiment has cooled, the near-term outlook remains positive due to an ongoing recovery in the wider UK economy. Manufacturers are confident about increased output growth and plan to raise stock levels to meet expected demand. The recent King’s Speech, with measures to reform planning and speed up infrastructure project approvals, is seen as potentially boosting business confidence and economic growth.
The survey, which gathered responses from 257 manufacturing firms, highlights both challenges and optimism within the UK manufacturing sector.
