19 May 2017

UK manufacturing output growth picks up pace

Manufacturing order books improved on April, and output growth accelerated in the three months to May, according to CBI.

Its latest Industrial Trends Survey of 432 manufacturers reported that total order books were the highest since February 2015, with 26% of manufacturers reporting total order books to be above normal and 17% below normal – a balance of +9%.

Export orders also stayed robust, CBI said, with 22% of firms stating their export order books were above normal and 12% below normal – a balance of +10%.

Meanwhile, output growth picked up pace, with 41% of businesses saying the volume of output over the past three months was up and 12% down – giving a rounded balance of +28% (the fastest pace of growth since December 2013).

CBI said this was underpinned by the mechanical engineering and chemicals sectors.

However, pricing pressures remain strong, CBI warned, with manufacturers continuing to expect a sharp rise in average selling prices. Expectations have also eased slightly and stock adequacy improved marginally.

Rain Newton-Smith, CBI chief economist, said: “The summer sun has come out early for Britain’s manufacturers. Robust demand at both home and abroad is reflected in strong order books, and output is picking up the pace.

“On the other side of the coin though, we have mounting cost pressures and expectations for factory-gate price rises are running high.

“Boosting productivity is key to alleviating some of the cost pressures that manufacturers are facing. Sustained investment in innovation and education will be vital to shore up the success of British industry.”

Adam Offord

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