The latest monthly Industrial Trends Survey from the Confederation of British Industry, released today, shows export orders are continuing to grow but overall demand remains weak.
Output expectations for the next three months are the highest since March 2008 with a balance of +7 per cent. 25 per cent of manufacturers expect a rise while 18 per cent expect a fall.
Total orders are also improving, but a balance of -36 per cent (+10pc/-46pc) still paints a bleak picture. An export balance of -23 per cent (+14pc/-36pc) is the least negative since August 2008 though.
Firms are still overstocked, but slightly less so with a balance of +12 per cent. A balance of +8 per cent expects prices to rise over the coming quarter.
“Manufacturing production is slowly recovering as demand for UK-made goods overseas is improving, boosted by the relative weakness of Sterling,” said CBI chief economic adviser Ian McCafferty. “Stock levels are now much closer to requirements, suggesting the period of aggressive destocking is now over.”
However, “given the continued weakness of total orders, growth prospects are likely to remain subdued,” he warned.
David Raistrick, UK manufacturing leader at Deloitte, said the trends show that the UK manufacturing sector should focus its efforts on advanced, high tech manufacturing to try and bring the industry share of GDP backup to the levels of around 20 per cent that it used to enjoy from its current 13 per cent.
“Our manufacturing sector is no longer built upon what we consider to be traditional industries such as steel, coal and textiles,” he said. “Rather we must invest in the medium to high-technology areas requiring the highly skilled workforce and advanced skill base that we have in abundance. These skills, together with an innovative approach and focus in these emerging areas, will help ensure a prosperous long term future for British manufacturing.”