British manufacturing boosted by higher demand

Output growth in manufacturing accelerated in February, according to the latest CBI Industrial Trends Survey. Output grew at one of the strongest rates since the CBI’s survey records began in 1975.

The survey, of 380 manufacturers, found that total order books also improved slightly on January, though they remained below levels recorded in November and December last year.

“The manufacturing sector shows continued signs of improvement, with demand high and steady and output growing strongly,” says Anna Leach, CBI head of economic analysis.

Optimism about output prospects among manufacturers also improved, the survey shows, with expectations for output growth over the coming three months at their strongest since September. Sixteen out of 17 sectors expect output to expand over the next three months.

Leach adds: “Growth is increasingly broad-based and firms’ growth expectations are the highest for several months. As the UK and global economies continue to strengthen over the coming months, we expect conditions to improve for UK manufacturers and to increasingly feed through to business investment.”

Key findings from the survey:

• 26 per cent of firms reported that total order books were above normal in February and 23 per cent said they were below giving a balance of +3 per cent, an increase from January (-2 per cent) and well above the long-run average (-17 per cent), although below the levels in December (+12 per cent)
• 18 per cent said their export order books were above normal and 19 per cent said they were below normal giving a balance of -1 per cent, well above the long-run average (-20 per cent)
• 41 per cent of firms said the volume of output was up and 17 per cent firms said it was down, giving a balance of +24 per cent, an increase from +18 per cent in January’s survey
• Firms expect output to continue to grow with 37 per cent expecting output to increase over the next three months and 8 per cent expecting orders to decrease, giving a rounded balance of +28 per cent
• Output price expectations remained elevated (+17 per cent) although marginally below January’s figure (+20 per cent). 22 per cent stated average prices at which domestic orders are booked were up and 5 per cent said they were down
• Stock adequacy of finished goods (+10 per cent) remained a little below average (+14 per cent).

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