UK manufacturing output falls, sentiment deteriorates in April - CBI

(Sharecast News) - UK manufacturing output and orders fell in the three months to April, with sentiment deteriorating sharply, according to the latest Industrial Trends survey from the Confederation of British Industry.

Output volumes fell at a faster pace than in March, with a net balance of -27% in April versus -23% the month before. A balance is the weighted percentage of firms reporting an increase and those reporting a decrease.

The CBI said output fell in 14 of 17 sub-sectors, driven by declines in the food, drink & tobacco, chemicals, metal products and mechanical engineering sub-sectors.

Meanwhile, the quarterly measure of optimism over the business outlook slumped to -65 in April from -19 in January.

CBI lead economist Ben Jones said: "Warning signs are flashing in this survey. Sentiment among UK manufacturers is deteriorating at a speed not seen since the pandemic. It's clear that the war in the Middle East is contributing to rising uncertainty, with supply chains beginning to see some renewed strain and cost pressures intensifying.

"The UK's high industrial energy costs were a concern even before the conflict, leaving the manufacturing sector vulnerable to the crisis. And as the squeeze on competitiveness becomes more pronounced, output and orders are weakening, spare capacity is rising and manufacturers are scaling back hiring and investment plans."

Jones said the recent announcement to boost clean energy and decouple gas from electricity prices is a welcome step, highlighting the need for a consistent and coordinated approach to energy policy to strengthen industrial competitiveness.

"The government should now work with business to explore how to remove non-energy 'policy' costs from electricity bills, support industrial energy efficiency, and advance renewable infrastructure. Energy security is economic security; by securing the right foundations, we enable manufacturers to invest, compete and grow."