The Confederation of British Industry (CBI) reported an improvement in its monthly net balance of new manufacturing orders, which rose to -19 in November 2024 from -27 in October. This exceeded market expectations of -25 and marked a modest recovery. While total order books remained below “normal” levels, the improvement signals a slight rebound in demand. Export order books, however, continued to lag, also classified as below “normal.”

Inflation Expectations and Stock Levels

A notable shift in the survey was the rise in expectations for average selling price inflation, climbing to 11 from 0. This suggests manufacturers anticipate higher costs ahead. Meanwhile, stocks of finished goods were reported as more than “adequate,” reaching their highest level since August 2020 (21 vs 17 in October). These trends underscore a complex environment where demand shows signs of recovery but uncertainties persist.

Challenges and Uncertainty Impact Output

Ben Jones, Lead Economist at the CBI, highlighted the challenges faced by manufacturers. “Output has underperformed expectations in recent months, with manufacturers pointing to uncertainty around the UK Budget, the US elections, and recent political instability in Europe as among the factors leading customers to pause or cancel orders,” he stated. This environment of uncertainty has hindered business activity, with many firms reassessing their strategies for pay, hiring, and investment.

Optimism for Growth Despite Headwinds

Despite these hurdles, the outlook for the coming months is more optimistic. Jones noted, “It’s an encouraging sign that output volumes are expected to return to growth in the quarter ahead.” This anticipated growth suggests manufacturers are beginning to navigate uncertainties and find a path forward. The gradual improvement in demand and increased clarity on political and economic fronts could support a stronger recovery in the manufacturing sector.