Food and drink sector leads CBI’s manufacturing output survey

By Lorraine Mullaney

- Last updated on GMT

Related tags Macroeconomics

Food and drink businesses are expecting to lift output over the next three months, according to the CBI survey
Food and drink businesses are expecting to lift output over the next three months, according to the CBI survey
The food and drink sector is leading the UK’s industrial output, according to the Confederation of British Industry’s (CBI’s) latest monthly Industrial Trends Survey.

In this month’s survey of 398 firms, manufacturers said output growth remained steady but they expected it to accelerate sharply in the next three months.

The mood was particularly bright in the food and drink sectors, which anticipated a rapid rise in output volumes in the next quarter in the strongest expectations recorded since April last year.

Export orders were at their highest level for three months, while total orders were broadly flat.

Meanwhile, expected price inflation had fallen back to levels last seen midway through last year.

Manufacturers more optimistic

Anna Leach, the CBI’s head of economic analysis, said: “Manufacturers appear more optimistic about the next few months than the official figures and commentary would suggest, with sharp rises in output expected right across the sector.

“Total orders were steady and in line with long-run averages and there was some pickup in exports, possibly helped by the weak pound.”

Leach added that price expectations had fallen to the lowest level for six months. That was “driven by inflation expectations plummeting from near-record highs in the food, drink and tobacco sector”.

The survey was conducted between February 21 and March 13.


Key findings​:

• 15% of firms reported order books above normal (excluding seasonal variations), and 30% below, giving an overall balance of -15%. It remains in line with long-term average of -17% and in line with reported orders in February (-14%);

 • 19% of firms reported export order books above normal, 30% below, giving an overall balance of -11%, the highest level for three months (-11% in December) and well above the long-term average of -21%;

 • Output growth over the past three months was steady, with 28% of firms reporting volumes up and 25% down, to give an overall balance of +3% which is in line with expectations at the end of last year. There was strong growth in the three largest sectors – food, drink and tobacco, chemicals and motor vehicles and transport environment. But that was offset by falls in other sectors;

 • Output is expected to rise sharply over the next three months. Some 35% of firms predict increases and only 13% expect falls – an overall balance of +22%, the highest since April last year. The anticipated acceleration is broad-based, but driven primarily by the food, drink and tobacco sector and the mechanical engineering sector, which has reported flat or declining output for nine of the past 10 months;

• Average prices over the next three months are expected to fall back with 14% of firms reporting prices rising, and 9% predicting drops. The overall balance of +5% is the lowest for six months and a big drop from +21% in January and +20% in February. This was driven almost entirely by inflation expectations in the food, drink and tobacco sector falling from +59% to +2%.

Source: CBI

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