Destocking in manufacturing sector may be coming to an end, says CBI

20th August 2009 | supply | British manufacturers are finally preparing to increase production after months spent running down stock to minimum levels. The CBI's Industrial Trends Survey showed suppliers are feeling more positive than at any time in the past year, with fewer firms fearful that output will fall further.

32% of companies surveyed said they expected the volume of output to fall over the next three months, while 27% said it should increase. The resulting -5% balance is the least negative prediction since June of last year. However, the improved outlook is more a reflection of low inventory levels than anticipated improved demand.

54% of manufacturers reported total order books below normal, an improvement on the prior month but still the seventh consecutive month of low demand. CBI director general Richard Lambert said that while 'order books continue to look anaemic, expectations for manufacturing output over the coming three months are the least negative in over a year.

'This is partly because many firms have run their stock levels down quite aggressively over the summer, so some are now looking to raise production. It looks like destocking in the manufacturing sector may be coming to an end which offers a further sign that the UK economy is starting to stabilise.'