UK independent employers’ organisation the Confederation of British Industry (CBI) released its CBI Industrial Trends Survey on Thursday, which indicates that manufacturing output in Britain will increase over the next three months.
The CBI Industrial Trends Survey, which 437 manufacturers took part in, reveals that activity in the UK manufacturing sector continued on solid ground in May this year, with the volume of output increasing at the same rate as in the previous two months and with stronger growth expected in next quarter.
According to the survey, 36% of firms said the volume of output had increased over the last three months, while 21% reported a downturn. These figures gave a balance of +15% for the third consecutive month, which was well above the average of +2%.
Respondents to the CBI survey anticipate that output will grow, with 39% predicting growth in activity, while 7% expecting their output to decline, giving an overall balance of +32%. This balance is unchanged since April this year and if expectations are met, the balance would be the highest since the balance in September last year of +33%.
Total order books were reported as being well above the long-run average, with 22% of firms disclosing that their total order books were higher than normal, while 22% said their order books were lower than usual, giving a balance of 0%. This almost the same as the April balance of -1% and much higher than the long-run average of -16%.
Despite export orders dropping below typical numbers, they remained strong by historical standards, mainly driven by the chemicals and automotive sectors. Export order books for 19% of manufacturing firms were higher than usual, while 28% of survey respondents said their export order book figures were lower than normal, which resulted in a rounded balance of -9%.
Expected output prices were moderate at +4%, in comparison with a balance of +9% in April this year.
Current stocks of finished goods were said to be more than adequate for 16% of firms, while 8% of manufacturing companies said their stocks of finished goods were less than adequate, resulting in a balance of +8%.
CBI deputy director-general Katja Hall, commented: “Overall, the manufacturing sector continues to perform well. Output growth is on an upward trend, with firms expecting an even stronger rise in the next three months.
“Inflationary pressures are under control, with firms now expecting only a slight rise in the selling prices of their goods.
“The recent rise in Sterling, coupled with a tepid recovery in the Eurozone could weigh on export demand. As the UK’s economic recovery gains a firmer footing, we need to ramp up manufacturing exports to high-growth markets, driving job creation here in the UK.”