UK manufacturing output flat, but cost and price inflation ease to slowest pace since 2021

Cost and pricing pressures in UK manufacturing remain high, but shows signs of easing, according to the CBI’s latest Industrial Trends survey. In the quarter to January, average unit costs grew at the slowest pace since April 2021, while domestic selling price inflation was the slowest since July 2021. But both remained far above their long-run averages.

Manufacturers reported stable output volumes in the quarter to January, following a modest decline in the quarter to December. New orders were flat, while the volume of total order books fell further below normal, suggesting that output has been supported in part by manufacturers tackling backlogs of work. Looking ahead, manufacturers expect new orders and output volumes to increase in the next quarter.

The survey, based on the responses of 321 manufacturing firms, found that:

• Business sentiment fell for the fifth consecutive quarter, but at a much slower rate than in the three months to October. Export optimism also fell, but less quickly than in October.

• Output volumes were stable in the quarter to January, after falling in the three months to December (weighted balance of -1% from -9%). Rising output in the mechanical engineering and food, drink & tobacco sub-sectors was