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UK Manufacturing Growth To Ease; Selling Price Inflation Expectations At 9-Month Low

The UK manufacturing output growth is set to ease further in the coming three months and domestic price growth expectations eased to a nine-month low, the Industrial Trends Survey results from the Confederation of British Industry showed on Tuesday.

The manufacturing output balance fell to +25 percent in three months to June from +30 percent in May. A net balance of 20 percent forecast production to rise in the three months ahead.

Among 17 sectors of production, the motor vehicles and aerospace sub-sectors provided the largest contribution to the improvement, while the food, drink & tobacco sub-sector made a negative contribution for the first time in just over a year.

The order book balance declined to +18 percent from +26 percent in May and also remained below economists' forecast of +22 percent. At the same time, the volume of export order books fell back to a normal level of +1 percent versus +19 percent in May.

The survey showed that expected domestic price growth weakened markedly in three months to June, with the balance falling to +58 percent from +75 percent in May. This was the weakest selling price inflation expectations since September 2021.

Manufacturers continue to report a range of challenges, including significant cost pressures, shipping delays, shortages of key inputs, and, not least, recruitment difficulties, Anna Leach, CBI Deputy Chief Economist, said.

Skills shortages remain widespread and are a key constraint on growth, the economist said. All of these trends are weighing on confidence.

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