Manufacturing activity drops but demand remains steady

The survey of UK manufacturers found that output volumes over the three months to March fell at the fastest pace since September 2009.

In total, 8 of the 18 manufacturing sub-sectors posted a decline in output. Two-thirds of this decline reflected weakness in the food and drink sector, with localised flooding and mild weather potentially having hit production.

Manufacturers anticipate a particularly strong rise in output over the next quarter, placing expectations at the highest level for thirteen months, with a rebound in food and drink.

Meanwhile, total order books rose slightly from the level seen since the start of the year, and export orders also remained unchanged from February. Both measures sit just above average levels.

Companies still anticipate that prices will fall in the near-term, albeit to a lesser extent than they did in the previous month.

Rain Newton-Smith, CBI Director of Economics, said: “March has been a mixed month for the UK’s manufacturers. Whilst total order and export books remained steady, a drop in output reflected some volatility in the food and drink sector. Reassuringly, manufacturers expect a swift turnaround in activity.

“While the Budget included several policies that should drive growth, the absence of further measures to support innovation, and research and development, was a missed opportunity to boost investment. The Government’s upcoming National Innovation Plan needs to address this vital issue.”