A Confederation of British Industry’s trends survey indicates that manufacturers are feeling more positive about the industry sector’s prospects than they have for twenty years. For the full picture, please read the article below which appeared in The Daily Telegraph today.
Roger Mundy, Managing Director, Beardsley Theobalds. 22nd March 2017
CBI trend survey shows industry at most optimistic since 1995
Britain’s manufacturers are feeling their most positive about the prospects for the sector in two decades, according to an influential economic indicator.
The Confederation of British Industry’s latest trends survey shows that for the coming quarter, 45pc of industrial companies expect to grow, against 10pc who expect to contract. This gives a rounded balance of +36pc of businesses in the sector who are predicting expansion in the coming three months – a level not seen since February 1995.
The positive sentiment was backed by export order books, which hit their highest level in more than three years, helped by the pound’s weakness since the EU referendum. Weaker sterling makes British-made products cheaper for foreign buyers.
Some 24pc of the 423 companies surveyed by the business lobby group reported export demand was higher than normal, against 14pc who said it was down, giving a rounded balance of +10pc. The last time this level was beaten was in December 2013 when a balance of +11pc was recorded.
Although the recent rise in export demand was what the CBI described as “broad-based”, half of it was accounted for by the pharmaceutical and mechanical engineering sectors.
Anna Leach, the CBI’s head of economic intelligence, said: “It’s been a strong month for UK manufacturers, with production growing robustly and overseas demand on the up. The past fall in the pound seems finally to be helping lift demand for UK manufactured exports, which rose at one of the fastest paces in this survey’s history. And manufacturers are positive about the quarter ahead, expecting output to grow at the fastest rate since February 1995.”
The survey also found a balance of +23pc of companies reported a rise in output volumes, the highest since July 2014, and average output prices are expected to increase over the next quarter by a balance of 29pc.
The CBI sounded the alarm on pricing pressures – potentially a result of the weak pound as companies source materials abroad.
Ms Leach said: “The flipside is that cost pressures are widespread, and manufacturers expect factory-gate prices to continue to rise strongly over the next three months, putting pressure on prices generally.”
Howard Archer, chief UK and European economist at IHS Markit, called the CBi’s findings “largely buoyant” but noted that “as there was a sharp pick-up in export orders in March, the fact that the overall orders level was stable at February’s level (albeit at a two-year high) points to some slowdown in domestic demand”.