Manufacturing output volumes fell in the three months to December, though at a slower pace than in November – according to the CBI’s latest Industrial Trends Survey (ITS). Manufacturers expect volumes to decline at a similar pace in the three months to March.

Total and export order books also improved relative to last month, though remain historically weak. Stock adequacy eased but manufacturers report that inventories of finished goods remain more than adequate. Expectations for selling price inflation picked up, with the survey balance rising above the long-run average.

The survey, based on the responses of 350 manufacturers, found:

• Output volumes fell in the three months to December but at a slower pace than last month (weighted balance of -21%, from -30% in the quarter to November). Manufacturers expect output volumes to decline at a similar pace in the three months to March (-17%).
• Output decreased in 15 out of 17 sub-sectors in the three months to December, with the fall being driven by the chemicals, metal products, and mechanical engineering sub-sectors.
• Total order books were reported as below “normal” in December but improved from last month (-32%, from -37% in November). The level of order books remained significantly below the long-run average (-14%).
• Export order books were also reported as below “normal”, to a slightly lesser extent than in November (-27%, from -31% in November). The balance was also below the long-run average (-19%).

• Expectations for average selling price inflation strengthened notably in December (+19%, from +7% in November), standing above the long-run average (+8%).
• Stocks of finished goods were reported as more than “adequate” in December (+8%, from +16% in November), with the balance standing marginally below the long-run average (+12%).