UK manufacturing order books improved on April in to reach the highest level since February 2015, according to the latest CBI Industrial Trends Survey.
Furthermore, UK manufacturing export orders also remained steady, with output growth equalling the high level seen in March (itself, the strongest growth since December 2013).
Rain Newton-Smith, CBI chief economist, said that robust demand at both home and abroad was reflected in strong order books, and output was picking up the pace.
However, pricing pressures remain strong, with manufacturers reportedly expecting continued rises in average selling prices over the coming three months. This will temper the general positive effect of output rises will be lessened by strong remaining prices.
Newton-Smith said: “We have mounting cost pressures and expectations for factory-gate price rises are running high. Boosting productivity is key to alleviating some of the cost pressures that manufacturers are facing.”
About stock adequacy, the survey revealed that although it levels had the chance to improve slightly, they would remain below average overall.
Sixteen percent of firms said their present stocks of finished goods are more than adequate, while 12% said they were less adequate, giving a balance of +4%.
Summarising, Newton-Smith stated that sustained investment in innovation and education would be vital to shore up the success of UK manufacturing.
Key findings:
- 26% of manufacturers reported total order books to be above normal, and 17% said they were below normal, giving a balance of +9%. This was the highest level seen since February 2015 (+10%), and well above the long-run average (-15%)
- 22% of firms said their export order books were above normal, and 12% said they were below normal, giving a balance of +10%. This was the same as the level seen in March, which was the highest balance since December 2013 (+11%)
- 41% of businesses said the volume of output over the past three months was up, and 12% said it was down, giving a rounded balance of +28% – the fastest pace of growth since December 2013 (+29%)
- Manufacturers expect output to grow at the same robust pace in the coming quarter, with 37% predicting growth, and 10% a decline, giving a rounded balance of +28%
- Average selling prices are still expected to rise strongly, though predictions of growth have eased slightly (+23%) from their peak in February (+32%)
- 16% of firms said their present stocks of finished goods are more than adequate, whilst 12% said they were less adequate, giving a balance of +4%.
