Member Article

British manufacturing continues to recover according to CBI

The recovery in British manufacturing continued in the last quarter, with faster growth in domestic orders and output, according to the latest CBI quarterly Industrial Trends Survey.

The survey of 481 firms reported robust growth in orders in the three months to July. Total order book growth edged up on last quarter’s nineteen-year high, whilst domestic orders rose at their fastest pace since 1988, although export orders were flat. Numbers employed in the manufacturing sector also continued to rise strongly.

Firms are upbeat about the next quarter, with expectations for total new orders growth at their strongest since 1977, and export orders set to rebound.

Looking to the year ahead, manufacturers’ plans for investment in product and process innovation are at their strongest since 1989, with robust plans for spending on plant & machinery, and buildings. The number of firms investing to expand capacity reached a record high (since 1979).

However, the proportion of firms concerned that political and economic conditions abroad may limit export orders rose sharply to a five-quarter high.

Katja Hall, CBI deputy director-general, said: “The recovery in the manufacturing sector is keeping a good pace.

“Industry is performing well as orders and hiring are on the up, and investment intentions for the year ahead are looking healthy across the board.

“It is not all plain sailing however, and there are still risks to the recovery. These include increasing international political instability, and the recent rise in sterling, which could be weighing on exports.

“We need to continue to help manufacturers to export their products to high-growth markets across the globe, to give a healthy and sustainable boost to the UK’s recovery.”

Key findings – three months to July 2014:

• 41% of businesses reported an increase in total orders, and 17% a decrease, giving a balance of +24%, the highest since April 1995 (+27%)
• The balance for new domestic orders (+23%) was the highest since July 1988 (+25%), but export orders (0%) were flat, following growth in the three months to April (+16%)
• 33% of manufacturers said employment numbers were up, and 12% said they were down, giving a balance of +21%, the highest since January 1974 (+21%)
• 36% of businesses reported a rise in output volumes, and 13% a decrease, giving a balance of +23%
• Manufacturers’ investment intentions compared with the previous twelve months improved for product & process innovation (+32%, the highest since October 1989 (+33%) and training (+27%).
• The number of firms citing political/economic conditions abroad as a constraint on export orders in the coming three months (39%) rose to its highest since April 2013 (39%).

This was posted in Bdaily's Members' News section by Clare Burnett .