UK manufacturing close to 30 year high

With 28 per cent reporting an above normal order book

Manufacturing order books were stable and close to a 30 year high in the three months to December, according to the latest monthly CBI Industrial Trends Survey.

In the survey of 371 manufacturers, strong overall order books were driven by Motor Vehicles and Transport Equipment, and Mechanical Engineering sectors, although the strength was broad-based with 14 out of 17 sub-sectors reporting that order books were above normal. Export order books weakened slightly compared with November’s record levels, but remained strong.

Output growth was steady at a brisk pace in the three months to December, at a rate that was far above the long-run average.

However, respondents still expect output growth to moderate over the next quarter. 

Manufacturers expect output prices to rise at the fastest rate since June in the quarter ahead, while stock adequacy deteriorated to below its long-run average.

Anna Leach, CBI Head of Economic Intelligence, said:

“As we head towards the end of 2017, UK manufacturers’ total order books remain at a near 30 high, with export order books remaining at their strongest since the mid-1990s.

“While the lower level of sterling continues to support exporters, cost pressures remain intense. Businesses will expect to see the Government’s Industrial Strategy make rapid progress next year to support manufacturing and the wider economy in every corner of the UK.”

Key findings:

• 28 per cent of manufacturers reported total order books to be above normal, and 11 per cent said they were below normal, giving a balance of +17 per cent (joint highest with last month and August 1988)
• 28 per ent of firms said their export order books were above normal, and 12 per cent said they were below normal, giving a balance of +16 per cent well above the long-run average of -18 per cent
• 42 per cent of businesses said the volume of output over the past three months was up, and 11 per cent said it was down, giving a rounded balance of +30 per cent above the long-run average of +4 per cent
• Manufacturers expect output growth to slow in the coming quarter, with 26 per cent predicting volumes to increase, and 13 per cent expecting a decline, giving a balance of +13 per cent
• 29 per cent of companies expect average selling prices to increase in the coming three months, with 6 per cent predicting a decline, giving a balance of +23 per cent
• 7 per cent of firms said their present stocks of finished goods are more than adequate, whilst 10 per cent said they were less than adequate, giving a balance of -3 per cent.