CBI: Recovery in manufacturing order books looks promising
By Sarah Wood | 20th June 2018
Manufacturing order books recovered and the volume of output increased strongly in the three months to June, according to the latest monthly CBI Industrial Trends Survey.
According to the survey of 388 manufacturers, output grew at the fastest pace since December 2017 in the three months to June, broadly in line with expectations. Growth was broad-based, with output growing in 14 out of 17 sub-sectors, with growth mostly driven by Food, Drink and Tobacco and Mechanical Engineering. Respondents anticipate that output growth will slow slightly over the next three months.
Total order books returned to the healthier levels recorded at the end of 2017, while export orders remained stable and well above average, in line with the past 16 months.
While the CBI expects manufacturers to continue to benefit from robust external demand and the lower exchange rate, overall economic growth is expected to remain subdued due to weak consumer income growth and investment being held back by ongoing uncertainty.
Anna Leach, CBI head of economic intelligence, said: "The recovery in orders and a return to bumper growth in production suggests the lull in manufacturing activity may be over. While risks to demand persist from Brexit and escalating global trade tensions, firms can work with the government to nurture a pro-enterprise environment that helps UK growth to shift up a gear. There is much within the UK's control that can be acted on now to lift UK productivity, from building a third runway at Heathrow to investing in the skills of the future."
Tom Crotty, group director of Ineos and chair of CBI Manufacturing Council, said: "Improvements in order books and strong output growth are good news for UK manufacturers, particularly after the slowdown that we had seen since the beginning of the year.
"But it is becoming increasingly important for the government to provide more clarity to UK businesses so that they can better compete at home and globally."
Key findings:
- 33 per cent of manufacturers reported total order books to be above normal, and 20 per cent said they were below normal, giving a balance of +13 per cent
- 20 per cent of firms said their export order books were above normal, and 11 per cent said they were below normal, giving a balance of +9 per cent
- 43 per cent of businesses said the volume of output over the past three months was up, and 13 per cent said it was down, giving a rounded balance of +29 per cent
- Manufacturers expect output growth to slow slightly in the coming quarter, with 30 per cent predicting volumes to increase, and 12 per cent expecting a decline, giving a balance of +18 per cent
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