UK Manufacturers Hit by Record Stock Shortages as Industry Growth Slows

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August 23, 2021 Updated: August 23, 2021

UK manufacturers saw output growth for the past three months ease back from record highs as firms saw stock shortages strike record levels.

The latest monthly industrial trends survey by the Confederation for British Industry (CBI) said activity was “strong” as order books remained “firm.”

The survey of 262 major manufacturers found that output increased in 13 out of 17 sectors, with growth particularly driven by the food, drink, and tobacco sectors.

It reported 22 percent growth for the quarter to August, representing a slow-down from the 37 percent rise for the three months to July.

The CBI said the survey showed this was driven primarily by the motor vehicles industry, which saw output drop from a near-record pace to being flat for the period.

However, manufacturers have said they expect output growth to pick up again over the next three months.

Alpesh Paleja, lead economist at the CBI, said: “Manufacturing activity remained strong this month, with total order books remaining firm and most sub-sectors reporting rising output.

“However, early signs from the data suggest that growth in activity may have peaked.”

The survey also revealed that stock levels deteriorated to a new record low for the time in consecutive months.

Paleja added, “Many firms are feeling the pinch from ongoing supply chain disruption, which also partly explains the continued strength in pricing pressures.”

Firms reported a stock adequacy reading negative 14 percent for the period, representing the worst figure since records began in 1977, as respondents highlighted, particularly, issues in electronic engineering and plastic products.

Tom Crotty, group director at Ineos and chair of the CBI manufacturing council, said: “While it is great to see manufacturing performing well, there is no getting away from the fact that many firms are facing serious challenges, such as staff shortages, supply disruption, and rising costs.

“It is important that these issues are addressed quickly.”

By Henry Saker-Clark

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