CBI Industrial Trends Survey, August 2023: The CBI Industrial Trends Survey (ITS) dated August* showed a sharp drop in the balance for output volumes in the latest three months as this fell to its lowest level since September 2020. Despite this weakness, the survey’s respondents expect a broadly flat trend for the coming three months, although these expectations are the weakest since the May survey.
Output fell in 15 of the 17 sub-sectors used in the ITS with the weakest being motor vehicles & transport equipment, mechanical engineering, paper, printing & media and chemicals.
The balance for total order books was lower than in the previous survey but is now roughly in-line with the long-run average for this measure; the latest reading of -15 is the same as in June and better than any of the months from January to May, so it is not quite as weak as the headline might suggest.
Export order books also fell back compared to the July survey but, again, they are on the long-run average and better than most of the earlier months of 2023 (April is an exception in this series).
Stocks of finished goods were above “adequate” in August* but still below the long-run average and behind the level we saw in the April/May/June* surveys.
* Note that although this survey is dated August, the data collection took place between 26th July and 11th August so the results are likely to refer to the 3-month periods from May to July (past) and August to October 2023 (future).
You can get the Press Release of the CBI ITS from their website at www.cbi.org.uk/media-centre (22 August) or request it from MTA (we can also provide a summary of the results).
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Flash Manufacturing PMI, August 2023: The flash estimates of the Purchasing Managers’ Index (PMI) for the UK manufacturing sector fell sharply again to 42.5 and is now at its lowest level for 39 months (back to May 2020). It has now been below the crucial 50 level for 13 months. Within the overall calculation, the output element fell again and is at a 12-month low as orders continue to contract; despite the sharp fall in output, the survey still recorded another reduction in order backlogs.
In the Euro-zone the flash estimate of the manufacturing PMI improved slightly compared to July but although the reading of 43.7 is a 3-month high, it is still pointing to a significant downturn in activity. Similarly, output continues to fall significantly, although at a slightly slower pace than in July – this makes it the second-strongest fall in production for 11 years if the Covid months are ignored. Suppliers’ delivery times continue to improve, adding to the negative trend in the overall PMI calculation.
The only EU countries with a flash manufacturing PMI are France and Germany. The former was broadly in line with the Euro-zone trend with improvements in both output and the overall manufacturing PMI only representing a less rapid decline with figures still well below the crucial 50 level.
Germany saw a marginal improvement in the manufacturing PMI reading but at 39.1 it remains very low. Output fell at an accelerated pace and the uptick in the overall index came mainly from the element covering suppliers’ delivery times and stocks of components as orders fell sharply again in the face of both customer destocking and a reticence to invest in the face of rising interest rates.
Elsewhere in the world, the flash estimate for the manufacturing PMI in Japan edged up to 49.7 (49.6 in July) with output and orders continuing to contract; the index was helped up by the first lengthening of suppliers’ delivery times for 4 months.
The USA also had a weakening picture with the overall PMI slipping to 47.0 thanks mainly to a fall in output following the marginal increase in this element of the index that they recorded for July. The pace of decline in new orders accelerated but the reduction in suppliers’ delivery times was frustrated in some cases by a shortage of drivers.These reports are available on the “PMI by S&P Global” website at https://www.pmi.spglobal.com/Public/Release/PressReleases or on request from MTA.