UK manufacturers see orders rebound but remain cautious

UK Manufacturing

An increased number of manufacturers in the UK have seen orders rise this month, but overall they expect output to be flat in the early part of 2013, a new survey shows.

The latest monthly Industrial Trends Survey by business organisation the CBI, which included 392 manufacturers, reveals that order books were above normal for the time of year for 18%, while 30% said that they were below normal. The resulting balance of -12% is a clear improvement on the -21% registered in November and higher than the long-run average of -17%.

The figures, which were released today, also show a slight rebound in export orders.

Expectations for the coming months are still extremely cautious, however. There was an even balance between the proportion of manufacturers who anticipated raising output and those who expected to cut it over the next three months. This shows an improvement on the balance of -9% recorded last month but is still well below the growth that was anticipated in October, when a balance of +12% expected to raise output.

UK manufacturers have also kept the level of their stocks low for the third consecutive quarter, another sign of their uncertainty about the economy in the new year.

Meanwhile, price pressures are rising. The CBI said that inflation expectations were the highest since March, with all but two of the 11 manufacturing sectors reporting an increase.

Anna Leach, head of economic analysis for the CBI, said that manufacturers remain hesitant in predicting further output growth and conditions in the industry and the wider economy are likely to remain fragile until global conditions improve over the course of 2013.

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