Manufacturing downturn eases in February but pipeline remains poor

(Sharecast News) - The downturn in the manufacturing sector eased slightly in the three months to February, but the pipeline for activity remains poor, according to the latest Industrial Trends survey from the Confederation of British Industry.

Output volumes fell in the period but at a slower pace than in January, with a net balance of -14% this month versus -25%. A balance is the weighted percentage of firms reporting an increase and those reporting a decrease.

The CBI said output declined in 13 out of 17 sub-sectors, with the fall driven by the metal products, food, drink & tobacco, and mechanical engineering sub-sectors.

Total orders books were reported as "below normal", with a balance of -28% in February from -30% in January, remaining considerably weaker than the long-run average of -14%.

Export order books were also reported as "below normal", albeit to a slightly lesser extent than in January, with a balance of -26%, up from -30%.

The survey found that expectations for average selling price inflation were elevated in February, with a balance of 26% versus 29% in January.

CBI senior economist Cameron Martin said: "The downturn in manufacturing output eased in February, after a downbeat period around the turn of the year. However, many firms continue to report customers holding back amid low confidence and elevated cost pressures.

"The Spring Forecast is an opportunity for the government to build momentum behind its growth mission and restore confidence. Manufacturers want to see the government focused on accelerating Industrial Strategy delivery, addressing skills shortages, and lowering the cost of doing business by bringing forward energy costs support. Tackling punitive energy costs will strengthen competitiveness, ease cost of living pressures, and help boost demand across the economy."