Outlook healthy for manufacturers, say CBI

Firms expect output to grow strongly in the coming quarter, a CBI survey said.

Firms expect output to grow strongly in the coming quarter, a CBI survey said.

First published in Business News The Northern Echo: Photograph of the Author by

THE outlook for manufacturing output growth in the next three months is strong, despite an easing of pace over the past quarter, the latest CBI survey shows.

While nine sectors surveyed reported that the pace of growth had slowed in the past three months, sixteen sectors anticipate growth over the coming quarter.

The survey of 414 manufacturers also found that total order books strengthened in August, returning to the robust level seen in June and becoming more broad-based across sectors. Export order books also recovered after a dip last month, though they still lag behind total orders.

Stock adequacy was at its highest for a year, possibly driven by the expectation that output will rise more strongly over the next quarter. In the three months ahead, output prices are expected to be flat.

Katja Hall, CBI Deputy Director-General, said: “The outlook for UK manufacturers remains healthy, with both total and export orders firming up. Despite a dip in the pace of output growth, companies expect a strong pick-up in the next three months.

“But with growth flat at best in the Eurozone and Sterling having risen in recent months, there are still some headwinds to export demand. We need more manufacturers exporting to high-growth markets, which will help to put the recovery onto a more balanced, sustainable footing.”

The key findings of the survey were:

• 37% of firms said the volume of output over the last three months was up and 25% said it was down, giving a balance of +12%, from +23% in July

• Firms expect output to grow strongly in the coming quarter, with 42% predicting growth, and 11% a decline, giving an overall balance of +31%

• 29% of firms reported that total order books were above normal and 18% said they were below normal, giving a balance of +11%

• 19% of firms said their export order books were above normal and 22% said they were below normal, giving a balance of -3%, against a long-run average of -20%

• Output price inflation expectations remained subdued (-1%), moderating only very slightly compared to July (-4%)

• 20% of firms said their present stocks of finished goods were more than adequate, and 5% reported they were less than adequate, giving a balance of +15%.

The survey was conducted between July 22 and August 13, with 414 manufacturers responding.

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