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Highlights
- Growth in the UK manufacturing sector slowed down in the three months to June.
- The expected domestic price growth for the quarter dipped from 75 in May to 58 in June.
According to the recently released CBI Industrial Trends (CBI) Survey, the overall growth in the UK manufacturing sector has slowed in the three months to June. The survey indicated softening of the total and export order books and a reduction in overall demand. Also, the report finds that the manufacturing output growth is anticipated to continue with the current trend before slowing down further in the upcoming quarter.
The CBI survey was carried out between 25 May and 13 June and got responses from 212 manufacturing representatives. In comparison to the output growth balance of 20 in May, the figure stood at 25 during the period. The report found that out of 17 sectors, the output grew in 12 sectors in the last quarter.
The significant contributors to the output growth were aerospace sub-sectors and motor vehicles. However, for the first time in over a year, the food, drink & tobacco sub-sector witnessed a fall in output.
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Export order books reached the expected level in June but were still higher than their long-term averages. However, total order books declined from 26 in May to 18 in June. The expected domestic price growth for the quarter plunged from 75 in May to 58 in June, marking its lowest expected levels for selling price inflation since September last year.
The manufacturing sector faces several challenges, including inflationary pressures, input shortfalls, shipping lags, and staffing obstacles. However, with price expectations hitting a nine-month low level, fewer manufacturers are planning to pass on the higher costs to customers now.
Amid the slowing growth and falling confidence in the sector, UK investors can keep an eye on the following manufacturing stocks offering decent returns.
AstraZeneca plc (LON: AZN)
The leading British- Swedish producer of pharmaceutical products, AstraZeneca plc, was down by 0.57% at 8:09 AM (GMT+1) on 22 June 2022, at GBX 10,070.00. The FTSE 100 company has provided its shareholders with a return of 20.09% over the past one year as of 22 June 2022, while its YTD return stands at 16.39%. AstraZeneca’s current market cap stands at £156,930.38m.
RELATED READ: GSK, AAL, IMB: Manufacturing stocks under lens amid record-high inflation
British American Tobacco plc (LON: BATS)
The shares of the UK-based cigarette manufacturing business, British American Tobacco plc, were down by 0.62% at 8:11 AM (GMT+1) on 22 June 2022, at GBX 3,476.00. The FTSE 100 company has provided its shareholders with a return of 24.66% over the past year as of 22 June, while its YTD return stands at 27.27%. British American Tobacco’s current market cap stands at £79,080.76m.
BAE Systems plc (LON: BA.)
The shares of the leading global arms, security, and aerospace group, BAE Systems plc, were down by 0.60% at 8:14 AM (GMT+1) on 22 June 2022, at GBX 757.40. The FTSE 100 company has provided its shareholders with a return of 41.19% over the past year as of 22 June 2022, while its YTD return stands at 37.72%. BAE System’s current market cap stands at £24,048.87m.
