UK manufacturers’ order book balance improves more than forecast in December - CBI

The latest survey by the Confederation of British Industry (CBI) revealed on Friday the UK manufacturers' order books improved to their strongest in ten months in December but remained far below their long-run average.

According to the report, the CBI's monthly factory order book balance increased to -25 in December from -40 in the previous month, but remained well below the long-run average of -14. This was the highest reading since February. Economists had forecast the reading to come in at -34. Export order books (-44) also rose from November (-51), but the improvement was much less marked, leaving them far below their long-run average (-18).

The CBI also reported that output volumes in the three months to December (-6) dropped at a similarly slow pace to November (-6). It was also expected that output would fall at a modest pace in the next three months (-6). In addition, manufacturers forecast output prices to see a very muted pricing pressure in the next three months (0 from -8 in November).

“In a positive sign for the pipeline of manufacturing activity, total order books in December improved to their strongest since February. By contrast, despite a mild improvement, export order books remained poor”, noted Anna Leach, CBI Deputy Chief Economist. “The rollout of the Covid vaccine brings hope that conditions for manufacturers will improve in the coming months. The government must continue to do what it can to support companies through the winter while demand remains disrupted by Covid restrictions.”

Meanwhile, Tom Crotty, Group Director at INEOS and Chair of the CBI Manufacturing Council, said: “2020 has been an incredibly difficult year for manufacturers, as firms have had to deal with the dual impact of a global pandemic and continued Brexit uncertainty. While the roll-out of the COVID-19 vaccine raises hopes for the future, government will still need to support manufacturers to get through the winter. One of the key ways the government can help manufacturers is to strike a Brexit deal, as manufacturing is one of the sectors that would be hardest hit by a no deal Brexit.”