Monday, October 18, 2021

UK factories struggling to meet demand amid supply chain crisis: Survey

UK factories have seen order books hit a record high this month as UK factories struggle to meet demand amid a supply chain crisis, but production growth has slowed sharply, according to a survey.

The latest Industrial Trends survey by the CBI business body showed that manufacturers reported order books at their strongest level since records began in 1977.

The export order book has also reached its highest level since March 2019.

However, production growth declined for the second month in a row, to its lowest level since May, a sign that the supply chain crisis is stalling the sector’s recovery.

CBI Deputy Chief Economist Anna Leach said: “Amidst many supply challenges, companies are beginning to struggle to meet high demand.

“With more than half of manufacturers surveyed reporting order books above normal, output growth has slowed sharply, though remains relatively strong.”

Tom Crotty, Group Director of INEOS and Chairman of the CBI Manufacturing Council, said: “Global supply chain issues and cost pressures continue to hold the sector back.

“It is important that these issues are addressed as a priority.”

The survey of 273 manufacturing firms showed a balance of plus 16 per cent for production growth, down from 22 per cent in August.

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According to CBI, the stock levels recovered marginally from record lows in August, but remained weaker than the long-term average.

Manufacturers are also facing rising prices due to reduced raw material shortages and high freight costs around the world.

The survey showed expectations for average prices over the next three months to be at a balance of plus 41 percent – ​​down from 43 percent in August, but more than 3 percent higher than the longer-run survey average.

The CBI warned that the rise in energy prices would further aggravate the inflation crisis in the sector.

“As well as skill and labor shortages, rapid increases in material costs, and shortages of key components, producers are now facing rising energy prices,” Leach said.

“With increasing pressure on energy supply in the colder months to come, energy security is critical to ensuring that critical parts of the supply chain are able to continue operating.”

by Holly Williams

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This News Originally From – The Epoch Times

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