UK Manufacturers see solid growth in production ahead

Published on Thursday, 19 May 2011 12:17
Posted by Scott Buckler

UK manufacturers expect strong output growth in the coming quarter, backed by healthy order books, the CBI said today (May 19th)

Of the 432 manufacturers responding to the CBI’s latest monthly Industrial Trends Survey, 22% described total order books as above normal, while 24% said they were below normal. The resulting balance of -2% is well above the long-term average and an improvement on the previous month’s balance of -11%.

The volume of export order books also picked up in May, but the gain was more modest, with 19% of firms saying they were above normal, and 22% below normal. That gives a resulting balance of -3%, which compares with -6% in April. This figure is also significantly above the long-term average and consistent with the trend of improvement that has been evident over the past two years.

With demand steadily improving, manufacturers predict solid output growth in line with previous months; a balance of +20% of firms expect output to rise in the next three months, compared with +22% in April.

Price pressures have moderated visibly this month, though they remain a concern. A balance of +24% of manufacturers are predicting they will raise output prices over the coming quarter, following +36% in April. This is the lowest expected rate of increase since January, but is still strong compared with last year.

Ian McCafferty, CBI Chief Economic Adviser, said:

Although there has been talk recently that the manufacturing recovery may be starting to flag, our survey shows manufacturers are still seeing solid growth in activity.

“Total and export order books are both well above their long-run averages and, with demand healthy, firms are predicting another strong rise in output.

“Predictions for output price inflation have moderated compared with earlier this year, which is encouraging. However, they are still very strong by historical comparison, reflecting high commodity prices and import costs, and inflationary pressures remain a concern.”

A balance of +9% of firms report adequate stock levels, similar to last month’s +8%, but this is still below the long-run average.

 

Source: CBI

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