Manufacturers expect strong output growth in the next three months, according to the CBI’s latest monthly Industrial Trends Survey of 404 companies.
But recently output has flat-lined, the business organisation said, as the survey found that growth was broadly flat over the three months to May.
The outlook is much brighter for the next quarter, however, with output volumes expected to rise strongly. The CBI says expectations have been elevated for three months.
Twelve of the 16 sub-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.
The CBI’s director of economics, Stephen Gifford, 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.”
The survey was conducted between 23rd April and 15th May.
Key findings:
- 13% of firms reported order books above normal (excluding seasonal variations), and 33% below, giving a balance of -20%, broadly in line with the long-term average of -17% and slightly above reported orders in April (-25%)
- 10% of firms reported export order books above normal, and 28% below, giving a rounded balance of -17%, broadly in line with the long-term average of -21% and slightly up on April (-21%)
- Output was broadly flat over the last three months, with 28% of firms reporting volumes up and 27% down. The balance of +1% is the first time since January that output growth has deteriorated on the previous month (+5%). Firms producing consumer goods were the main drivers of growth, with the food, drink & tobacco, and paper, printing & media sectors making the strongest contribution
Output is expected to rise sharply over the next three months – this is the third consecutive month of elevated output expectations. Some 33% of firms predict increases and only 15% expect falls, giving a balance of +18%. The anticipated acceleration is broad-based – 12 of the 16 sectors expect