.pressReleaseHeader .description-heading { display: none; }

Press release

22 Jun 2020 London, GB

June CBI Industrial Trends Survey signals manufacturing sector is still struggling

The June CBI industrial trends survey is still extremely weak overall indicating that the manufacturing sector is still struggling hugely despite the progressive easing of lockdown restrictions since mid-May.

Press contact

EY UK

Multidisciplinary professional services organisation

Related topics Advanced Manufacturing
  • The June CBI industrial trends survey is still extremely weak overall indicating that the manufacturing sector is still struggling hugely despite the progressive easing of lockdown restrictions since mid-May
  • There have been signs that the economy started to recover in May from April’s lows, and the expectation is that June will see further improvement in economic activity as lockdown restrictions have been eased further. However, the disappointing June CBI industrial trends survey highlights the fact that major uncertainty remains as to just how robust the recovery will be
  • We suspect that the economy will likely contract around 17% quarter-on-quarter in the second quarter. We expect the economy to return to clear growth in the third quarter with GDP expanding close to 10% quarter-on-quarter.  This assumes a further easing of lockdown restrictions, including a relaxation of social distancing rules. We expect GDP to contract around 8.0% over 2020
  • The CBI survey showed only a slight pick-up in orders in June from May’s lowest level since October 1981, as foreign demand fell to an all-time low. Output over the past three months contracted at a record rate
  • Prices over the next three months are expected to fall markedly, clearly reflecting manufacturers’ perceived need to discount to try to gain business by discounting
  • Output expectations for the next three months picked up modestly for a second month running in June from April’s record low, although they remained extremely low and well in contraction territory

Howard Archer, chief economic advisor to the EY ITEM Club, comments:

“The CBI industrial trends survey for June was very disappointing overall. It indicated the manufacturing sector is still struggling hugely despite the progressive easing of lockdown restrictions since mid-May.

“The industrial orders balance could only edge up to -58% in June from -62% in May, which had been the lowest level since October 1981. The balance had previously weakened to May’s low from -56% in April and -29% in March. At -58% in June, the balance was still hugely below the long-term average of -14%.

“Domestic orders showed limited improvement in June but were still very weak. Foreign demand deteriorated further to be at a record low (the series started in April 1977). Specifically, the export orders balance deteriorated to -79% in June from -55% in May, -49% in April and -28% in March. At -79% in June, it was substantially below the long-term average of -17%.

“Manufacturing volumes were reported to have fallen at the fastest rate on record over the three months to June (the series started in July 1975). A balance of -57% reported a rise in the three months to June, down from -54% in May, -21% in April and -8% in March.

“The CBI reported that output volumes dropped in 15 out of 17 sub-sectors. The headline fall in output volumes was driven by the motor vehicles & transport equipment, mechanical engineering, and metal products sub-sectors.

“There was modest improvement for a second month running in output expectations for the next three months in June - although they remained very low and well in contraction territory. A balance of -30% of manufacturers expect a rise in output over the next three months, compared to -49% in May and -67% in April. The balances had been -20% in March and +8% in February.

“A balance of -10% of manufacturers expect to raise prices over the next 3 months; this is the weakest price balance since April 2009, reflecting a perceived need to discount to win business. The balance had been -20% in May.”

Economy Still Headed for Substantial, Record Contraction in Second Quarter

Howard Archer adds: “There have been signs that the economy started to recover in May from April’s lows, and the expectation is that June will see further improvement in economic activity as lockdown restrictions have been eased further. However, the disappointing June CBI industrial trends survey highlights the fact that major uncertainty remains as to just how robust the recovery will be.

“In the second quarter we suspect that the economy will likely contract around 17% quarter-on-quarter. We expect the economy to return to clear growth in the third quarter with GDP expanding close to 10% quarter-on-quarter.  This assumes a further easing of lockdown restrictions, including a relaxation of social distancing rules.”