UK manufacturers’ order book balance unexpectedly worsens in September

The latest survey by the Confederation of British Industry (CBI) revealed on August the UK manufacturers' order books worsened slightly in September, remaining far weaker than their long-run average.

According to the report, the CBI's monthly factory order book balance decreased to -48 in September from -44 in the previous month. This was the lowest reading since June and was well below the long-run average of -14. Economists had forecast the reading to come in at -40. Export order books (-56), however, strengthened slightly from August (-60) but continue to be far below their long-run average (-18) as well.

The CBI also reported that output volumes in the three months to September (-20) declined at a slower pace than in August (-46). It was also expected that output would fall at a slower pace over the next three months (-6). Meanwhile, output prices were seen to be broadly flat in the next three months (-1 from -5 in August).

“While it’s good to see that output volumes once again fell at a slower pace this month compared to August, it is disappointing to see the modest improvements in order books stall, with demand at a still weak level,” – noted Anna Leach, CBI Deputy Chief Economist. “As manufacturing firms continue to battle against headwinds from a resurgence of the virus, weak global demand and uncertainty over our trading relationships, the Government must step up its support.”

Meanwhile, Tom Crotty, Group Director at INEOS and Chair of the CBI Manufacturing Council, said: “Manufacturers have endured a very difficult summer and these weak activity figures are, therefore, not surprising. Firms across the country are facing considerable uncertainty as the end of the Job Retention Scheme nears, and concerns about the potential for a no-deal Brexit have escalated as negotiations remain in stalemate.”