CBI says manufacturing activity is steady

Output in the UK manufacturing sector has been stable over the past quarter, but orders have fallen, according to the latest CBI quarterly Industrial Trends Survey.

The survey of 472 manufacturers reported that total new orders decreased in the three months to April, matching the decline in the previous quarter. This was driven by a dip in export orders, whilst domestic orders were broadly flat.

Average input costs rose at the fastest pace in two years, but firms found it difficult to pass on increased costs, with both domestic and export prices continuing to fall. Meanwhile, numbers employed in the manufacturing sector grew at a slightly quicker pace this quarter.

Businesses' outlook for the upcoming quarter is more positive; both output and demand are expected to grow, with the latter underpinned by strong expectations for export orders. Despite this, optimism about export prospects for the coming year has flat-lined.

Looking to the year ahead, manufacturers’ plans for investment in buildings, and in plant and machinery are at robust levels. Stronger investment intentions were primarily driven by chemicals and food and drink manufacturers.

Rain Newton-Smith, CBI Director of Economics, said: “Manufacturing has yet to pick-up after a flat start to the year, with falling orders providing little impetus for production. While expectations for the upcoming quarter are encouraging, manufacturers are still facing sizeable external headwinds.

“The falling exchange rate should give some support to manufacturers, and investment intentions are strong. With the expected pick-up in exports, it’s likely that firms will be looking to increase capacity.

“We need to continue to help manufacturers to export their products to markets across the globe. While businesses should take the lead, Government also has a role to play through the advice provided by UKTI and our Embassies.”

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