UK manufacturing returns to growth
1 min read
As exports pick up, manufacturing output rose for first time in two years, according to the CBI.
The latest quarterly Industrial Trends Survey revealed a stronger-than-expected rise in output in the three months to January.
Of the 461 manufacturers surveyed, 31 per cent said output rose during the three-month period, while 20 per cent said it fell. The resulting balance of +11 per cent is the strongest figure since January 2007 (+19 per cent).
Export orders rose for the first time since January 2008, boosted by the relative weakness of Sterling and improving global demand.
30 per cent of firms said exports grew during the quarter, while 24 per cent reported a fall, giving a balance of +6 per cent. Exports are expected to grow more strongly in the next quarter (+13 per cent), and firms are the most optimistic about export prospects for the coming year (+19 per cent), since July 1995 (+21 per cent).
But the CBI warned that the outlook for the sector remains uncertain, with domestic demand still weak, and some firms still struggling to access finance.
Domestic demand, however, was weaker than expected with 18 per cent of manufacturers reporting a rise, and 26 per cent a fall, giving a rounded balance of -9 per cent. That compared with a balance of -16 per cent in October. Total new orders were broadly unchanged (+1 per cent).
The availability of finance remains a concern, and is cited by 13 per cent of firms as a factor likely to limit output, and by 12 per cent as likely to limit export orders.
Despite that, sentiment about the overall business situation is continuing to improve, with a net 12 per cent more optimistic than three months ago.
The rate of job losses across the sector is slowing. A balance of -13 per cent indicated a drop in staff numbers during the quarter, an improvement on October's balance of -34 per cent.
Investment intentions for the year ahead are stabilising. Firms are planning on spending more on training and retraining (+11 per cent) and on innovation (+15 per cent). Investment in buildings will be cut back further (-18 per cent) and little change is expected in spending on plant and machinery (+1 per cent).
Domestic prices are expected to rise for the first time in six quarters (a balance of +8 per cent). 66 per cent of firms report that they are working below capacity, compared to 76 per cent in October.
