August factory orders grow faster than expected

The latest CBI industrial trends report showed domestic manufacturing output rising greater than expected.

UK factory orders grew faster than expected for August as overseas demand picked up, according the Confederation of British Industry’s latest industrial trends survey.

The CBI survey of 414 manufacturers showed orders rose to +11 in August from +2 in July, coming in above expectations of a reading of +4 and their long-run average of -16.

Foreign demand also saw a big increase, with orders rising to -3 from -16, comfortably above the -20 average reading.

Katja Hall, CBI deputy director general, said the outlook for UK industry remains healthy, despite last month’s slowdown which showed manufacturing rose a weaker than forecast 0.3% in June.

“The outlook for UK manufacturers remains healthy. Despite a dip in the pace of output growth, companies expect a strong pick-up in the next three months,” she said.

“But with growth flat at best in the euro zone and sterling having risen in recent months, there are still some headwinds to export demand,” she added.

Firms’ stocks of finished goods also rose to their highest in a year, which the CBI said possibly reflected expectations of higher future demand.

Companies also expect output to grow strongly in the coming quarter, with 42% predicting growth, and 11% a decline, giving an overall balance of +31%.