Manufacturing confidence continues to build
Manufacturers continue to expect strong output growth in the next three months, according to the CBI’s latest monthly Industrial Trends Survey. However, the survey of 404 firms found that output growth was broadly flat over the three months to May, again disappointing expectations for a more pronounced recovery.
However, the outlook is again much brighter for the next quarter, with output volumes expected to rise strongly – expectations have been elevated for three months. Twelve of the sixteen sectors anticipate a pick-up, with food, drink & tobacco, and mechanical engineering sectors being the key contributors to growth.
Both total orders and export orders edged up a little and were broadly in line with their long-run averages. Meanwhile expected price inflation has fallen back to its lowest since last September.
Stephen Gifford, CBI director of economics, said: “Manufacturers remain optimistic that demand will pick up in the next three months, despite a recent history of disappointed expectations. This tallies with what we’re hearing from some businesses about confidence returning. With orders improving and the global economy heading for calmer waters, it looks like conditions for manufacturers may be on the up.”
Key findings
Some 13 per cent of firms reported order books above normal (excluding seasonal variations), and 33 per cent below, giving a balance of -20 per cent, broadly in line with the long-term average of -17 per cent and slightly above reported orders in April (-25 per cent).
Some 10 per cent of firms reported export order books above normal, and 28 per cent below, giving a rounded balance of -17 per cent, broadly in line with the long-term average of -21 per cent and slightly up on April (-21 per cent).
Output is expected to rise sharply over the next three months – this is the third consecutive month of elevated output expectations. Some 33 per cent of firms predict increases and only 15 per cent expect falls, giving a balance of +18 per cent. The anticipated acceleration is broad-based – 12 of the 16 sectors expect a pick-up, but it is driven primarily by food, drink & tobacco, and mechanical engineering sectors.
The survey was conducted between 23April and 15May.
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