Export orders fuel output

Posted on 22 Jan 2010 by The Manufacturer

An increase in demand from abroad has inspired the UK’s first rise in production in over two years, according to the latest quarterly Industrial Trends Survey by the CBI.

The balance of output – the difference between the number of firms that said it rose and the number of firms that said it fell – was +11. This was the strongest recording since January 2007. The balance was garnered through 31 per cent reporting a rise and 20 per cent reporting a fall. The rest saw no change.

Export orders are up with a balance of +6 (30 per cent up, 24 per cent down), though a rounded balance of -9 per cent for domestic demand (18 per cent up, 26 per cent down) means total orders are at a similar level to what they were in the previous survey.
Optimism over expert prospects for the year ahead is highest since 1995.

Ian McCafferty, the CBI’s chief economic adviser thinks the weaker pound may finally now be paying dividends for UK exporters. However, manufacturers might not have seen an end to their troubles just yet.

He said: “Exports are rising for the first time in two years, as UK-made goods are looking more attractive in overseas markets. Manufacturers are also feeling upbeat about export prospects for the year ahead.

“However, the manufacturing sector is not out of the woods. With domestic demand still weak, and credit remaining constrained for some companies, firms expect growth to be more modest in the next quarter. This underlines our view that the UK’s economic recovery will be slow and protracted.”

Firms continued to trim their payrolls in the three months to January, though a balance of -13 per cent represents a significant improvement on the -34 per cent recorded in October. Investment intentions are improving too, with firms identifying training (+11%) and innovation (+15%) as areas for spend.

There are still 66 per cent of UK factories operating below capacity. This was 76 per cent in October.
The CBI’s received responses from 461 manufacturers for this latest Industrial Trends Survey.