Manufacturing output in the UK has fallen at its fastest rate in two years, a new survey has revealed.
Figures released by the Confederation of British Industry (CBI) show that output volumes in the three months to December had dropped at the fastest rate since the three months to September 2020 – during the Covid pandemic.
This fall was largely driven by the food, drink & tobacco, paper, printing & media, and mechanical engineering sectors.
Total order books as well as export order books were reported as below normal, while stocks of finished goods were seen as ‘adequate’.
The survey, based on the responses of 220 manufacturing firms, also found that output had fallen in 11 out of 17 sectors and that total order books were reported as below “normal”.
Average selling price inflation is expected to accelerate in the next three months, but this remains far below the multi-decade high seen earlier in the year in March.
Anna Leach, CBI Deputy Chief Economist, said: “The corrosive effect of higher inflation on demand is increasingly clear, with manufacturing output contracting at the fastest pace in two years over the last quarter.
“While some global price pressures have eased in recent months, cost and price inflation will likely remain very high in the near term, with rising energy bills a key concern for manufacturers.
“Government support for energy costs has been considerable already, buying time for businesses to adapt to Europe’s new energy landscape. And with the UK economy set to be in recession through much of 2023, there remains a strong case for further support in the coming year.”