CBI: manufacturing orders are holding up

Posted on 23 Aug 2011 by The Manufacturer

The CBI's monthly Industrial Trends Survey released today reveals that manufacturers’ expectations for output growth are above the long-run average and that pricing pressures are easing after a period of inflation.

In the survey, 510 manufacturers responded to questions about their export and domestic growth, price pressures and anticipations for the coming months. 29% of respondents described total orders as below normal, but 29% said they were above.

The rounded balance of +1% show that order books remain above the long-term average of -18%, and is an improvement on the previous month’s balance of -10%. The export order book balance was 0% this month, compared with -8% last month.

Optimism has picked up slightly compared to last month as well – 31% of firms predict that production will rise in the next three months, and 17% anticipate that it will fall. The resulting rounded balance of +13% remains above the long-term average of +6%, it represents a continuation of the broader trend of moderating expectations since April.

Pricing pressures have eased compared to the first two quarters of 2011. 19% of manufacturers expect to raise output prices over the coming quarter, and 10% expect to lower prices. The balance of +9% is lower than the stronger expectations seen in the months prior to July.

The CBI has expressed its relief at figures – claiming that the figures show manufacturing could be on the road to recovery after all.

“Manufacturing order books are holding up, and expectations for output growth are above their historical average, although they are less strong than earlier this year,” said CBI’s head of fiscal policy, Richard Woolhouse.

“Inflationary pressures have eased since the start of the year, with fewer firms predicting they will have to raise prices at the factory gate over the coming quarter,” he added.

George Archer