Output stabilises, orders flatline but manufacturing confidence lifts

Posted on 22 Jan 2013

Manufacturing orders were flat in the three months to January, while output was stable for the second quarter in a row, the CBI said today.

Both orders and output are expected to rise moderately over the next three months, and the employment and investment picture continues to look relatively positive.

Of the 389 manufacturers responding to the latest CBI quarterly Industrial Trends Survey, 25% reported that total new orders had risen, while 28% said they fell. The resulting rounded balance of -4% disappointed expectations of growth (+8%), but the rate of decline in orders was slower than in the previous quarter (-13%).

Within total orders, export orders continued to fall for the third consecutive quarter (-13% compared with -17% in the previous quarter), against expectations that they would stabilise.

However, manufacturers anticipate a resumption of growth in export orders in the coming three months (+7%), underpinning fairly robust expectations for total orders (+14%).

Anna Leach, CBI head of economic analysis, said: “While domestic demand and business optimism have steadied, export demand remains a concern for manufacturers, with orders continuing to fall, albeit at a slower rate. There are encouraging signs of stability in overall demand, however, with domestic orders, export orders and production expected to rise in the quarter ahead.”

“Within the global manufacturing economy these are actually good figures,” said Robin Johnson, head of industrial engineering at law firm Eversheds. “While import costs will again increase, exports should benefit as a result of this. However, manufacturers need to ensure they have robust hedging strategies.

“We are seeing evidence that south-east Asian countries are looking yet again to the UK for collaboration and our universities play a critical role within this context.”

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