What's Happening?
The Confederation of British Industry (CBI) has released its latest Industrial Trends Survey, indicating a significant decline in UK manufacturing output volumes over the three months leading to August. The survey, which gathered responses from 311 manufacturers, revealed that output volumes fell sharply, with expectations of further decline in the coming months. The decline is attributed to rising costs, trade frictions, and policy uncertainty, which have led to cautious customer behavior and reduced orders. Additionally, stocks of finished goods were reported as more than adequate, although below the long-run average, and expectations for selling price inflation have eased.
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Why It's Important?
The decline in manufacturing output highlights the challenges faced by UK manufacturers in the current economic climate. Rising costs, including high energy prices and increased employer NICs, are squeezing margins and impacting business operations. This situation is compounded by weak demand and trade frictions, which could have broader implications for the UK economy. The upcoming Autumn Budget is seen as a critical opportunity for the government to address these issues by providing business tax certainty and supporting industrial and infrastructure strategies. The CBI emphasizes the need for policies that foster a competitive and innovative economy.
What's Next?
Manufacturers are anticipating further declines in output volumes over the next three months, with expectations of continued challenges due to cost pressures and weak demand. The CBI is urging the government to take decisive action in the Autumn Budget to support businesses and address uncompetitive energy prices. The organization is ready to collaborate with the government to design policies that enhance the UK's economic competitiveness and innovation.
