The quarterly Industrial Trends Survey of 399 firms also found that optimism about business conditions fell for the first time in a year, while sentiment about export prospects continued to rise but at a slower pace.
Growth in output, domestic orders and export orders also eased but remained above their respective long-run averages. Meanwhile, investment intentions for the year ahead deteriorated and concerns over labour shortages edged up from already high levels.
The survey also found that numbers employed continued to rise strongly over the past three months, and hiring intentions for the quarter ahead remain above the long-run average. In addition, unit costs growth picked up compared with the previous quarter, running ahead of output price inflation.
Says CBI chief economist Rain Newton-Smith: “Growth in output and orders are still above historical norms, and it’s encouraging that plans for spending on innovation and training are holding their own. But we’ve seen a general softening in manufacturing activity over the past three months, with the outlook for investment becoming more subdued.
"To boost investment growth, government should use the Budget to provide a fillip for factories through business rate reforms, including exempting new plant and machinery from rates altogether, and switching to the more recognized CPI inflation measure rather RPI when calculating upratings.”
Key findings:
• 12% of firms said they were more optimistic about the general business situation than three months ago and 24% were less optimistic – giving a balance of -11%
• 26% of firms said the volume of output over the past three months was up and 12% said it was down – giving a balance of +14%
• 29% of businesses reported an increase in total orders and 23% a decrease – giving a balance of +6%.
• 31% of manufacturers said employee numbers were up and 15% said they were down – giving a rounded balance of +16%
• Average unit costs grew quicker (+32%) than the previous quarter (+20%). Growth in average domestic prices (+19%) was broadly unchanged, with export price inflation (+16%) remaining above average (-8%)
