UK manufacturers experience rising orders & prices

Posted on 23 Nov 2016 by Fred Tongue

UK manufacturing order books improved in November, but export order books and output growth eased, according to the CBI’s latest Industrial Trends Survey.

The survey questioned 430 UK manufacturers and found that order books returned to levels seen during the summer, which is well above the long-run average. Orders for exports has dipped slightly, but the figures still remain above average.

Output volumes rose at a pace that was slower than expected over the past three months. However, expectations for production in the upcoming quarter are expected to withstand the forthcoming challenges, according to the CBI, reaching their highest level since February 2015.

Manufacturers expect to increase average selling prices over the next three months at the fastest rate since January 2014, due to the sharp fall of the pound. Three-quarters of the rise comes from the food and drink sector, with price hikes for popular household commodities.

CBI chief economist,Rain Newton-Smith commented: “It’s good to see manufacturers’ overall order books at healthy levels, and the outlook for output growth remaining robust as we head into Christmas.

“But the weak pound is beginning to make its mark, and prices are expected to rise, especially in the food and drink sector. On the flip side though, export orders remain above average.

“To bolster British industry, manufacturers want to see bold decisions in the Autumn Statement. A crystal clear focus is needed on infrastructure, investment and innovation from the Chancellor, so that firms are given the very best environment in which to grow, both at home and abroad.”

Key findings:

  • 23% of manufacturers reported total order books to be above normal, and 26% said they were below normal, giving a balance of -3%. This was above average (-15%), and similar to the balance seen through the summer
  • 16% of firms said their export order books were above normal, and 27% said they were below normal, giving a balance of -11%. November’s level dropped on the previous month (-6%), but remained well above average (-19%)
  • 28% of businesses said the volume of output over the past three months was up, and 24% said it was down, giving a balance of +4%
  • Manufacturers expect output to grow robustly in the coming quarter, with 38% predicting growth, and 15% a decline, giving a rounded balance of +24%. This is the highest since February 2015 (+25%)
  • Average selling prices are expected to rise sharply over the next three months (+19%), and at their fastest pace since January 2014 (+20%)
  • 12% of firms said their present stocks of finished goods are more than adequate, while 10% said they were less adequate, giving a rounded balance of +3%. This was the lowest since July 2015 (+3%).