Friday 21 August 2020 11:52 am

CBI: UK manufacturing sector remained ‘depressed’ in August

The UK manufacturing sector remained “depressed” in August although the downturn eased, according to a new survey that showed new orders rising only slightly month on month.

The CBI’s monthly industrial trends survey’s measure of orders rose to minus 44 in August from minus 46 in July. It was below economists’ expectation of a rise to minus 35.

Read more: UK businesses grow at fastest rate in seven years as economy reopens

“Activity continues to be poor and order books severely depressed,” said Anna Leach, CBI deputy chief economist. “Although the worst of the decline seems to be behind us.”

A separate survey released today gave a more upbeat assessment of UK manufacturing, however. The IHS Markit/Cips purchasing managers’ index said factory output rose at the quickest pace in over six years in August.

However, the IHS Markit survey showed that manufacturers were slashing jobs at a rapid rate.

The CBI said that although things had improved, both total orders and exports remained well below their long-run averages.

Manufacturers expect output to fall at a much slower pace in the next three months, however.

Leach said: “It is a relief to see the pressure on manufacturers starting to ease.

“As the sector looks to rebuild from the economic shock, the government must consider additional ways to support this sector to help reinforce a recovery.”

She said that support could include “grants and further business rates relief”. Leach also said that help in adapting to “a new trading relationship with the EU is vital”.

The CBI survey showed that output volumes in the three months to August fell sharply, hitting minus 46 on the group’s gauge. However, the pace moderated on July’s survey-record decline which gave a score of minus 59.

Read more: UK retail sales climb above pre-pandemic levels in July

Tom Crotty, group director at Ineos, said there were signs “of the manufacturing downturn bottoming out”.

But he said it is “clear that many firms remain in distress and the sector looks set for a challenging Autumn”.

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