Factory output falls at fastest rate since mid-2020 - CBI

(Sharecast News) - Output volumes in the manufacturing sector fell in the quarter to December at the fastest pace since mid-2020, according to the latest Industrial Trends survey from the Confederation of British Industry. The survey showed that output volumes declined, with a weighted balance of -25 in December from -12 in the quarter to November. This marked the steepest drop since August 2020.

Total order books were reported as below "normal", with the balance deteriorating markedly to -40 in December from -19. This was the weakest level since November 2020 and well below the long run average of -13%.

Export order books were also reported as below "normal", with the balance coming in at -37% from -27%.

Expectations for average selling price inflation picked up in the quarter to December, with the balance at +23% versus +11% in November.

CBI lead economist Ben Jones said: "Manufacturing output appears to have contracted during the fourth quarter, with conditions across the sector looking more challenging than at any time since the Covid pandemic in 2020.

"Manufacturers are facing a perfect storm of weakening external demand on the one hand, amid political instability in some key European markets and uncertainty over US trade policy. And on the other hand, domestic business confidence has collapsed in the wake of the Budget, which has increased costs and led to widespread reports of project cancellations and falling orders.

"Manufacturers are heading into 2025 with no expectation of any near-term improvement. As firms continue to work through the challenges of the Budget, the Government could help support business confidence by accelerating measures that could restore some headroom for investment, such as delivering flexibility to the Apprenticeship Levy or signalling a faster timetable to reform business rates.

"And working in full partnership with boardrooms to develop a long-term industrial strategy would send the right signals to the markets and investors that the UK is a trusted and competitive destination to do business."