CBI: UK factory output falls at fastest rate since 2009

Chris Papadopoullos
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Manufacturing output fell sharply over the past three months, but demand remains robust, according to a new survey data.

Of the 471 manufacturers surveyed by the Confederation of British Industry (CBI), 18 per cent said output had gone up over the last three months compared with 33 per cent that reported a fall. The difference, or balance, of minus 15 per cent, is the lowest since September 2009.

However, demand is robust with the headline total order book balance rising to minus 14 per cent in March from minus 17 per cent last month.

Manufacturers are more optimistic about production over the next three months. The expected volume of output balance rose to a score of 23 per cent from February’s 11 per cent.

The manufacturing sector contracted last year, according to the Office for National Statistics. However, the latest figures show it rebounded in January, climbing 0.7 per cent on the month. The sector's output is still below pre-recession levels.

Output may also have been weak in February, with Markit's survey of purchasing managers dropping to a three-year low.

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.