We might have spent the past 18 months in the midst of a double dip recession and the future if you listen closely enough, is far from bright. Still, according to the CBI’s recent monthly Industrial Trends survey, manufacturers expect strong growth in the coming months.

Although recent output has flat-lined, the outlook is much brighter for the next quarter with output volumes expected to rise strongly. Twelve of the 16 sub-sectors anticipate a pick-up, with the food, drink and tobacco, and mechanical engineering sectors being the key contributors to growth.

Both total orders and export orders edged up a little and were broadly in line with their long-run averages. On top of that, expected price inflation has fallen back to its lowest since last September.

Experts suggest that manufacturers appear more optimistic about the next few months than the official figures and commentary would suggest. Sharp rises in output are expected right across the sector.

It’s claimed that total orders have been steady and in line with long-run averages and there was some pickup in exports, possibly helped by the weak pound.

The CBI’s director of economics, Stephen Gifford, said: “Manufacturers remain optimistic that demand will pick up in the next three months, despite a recent history of disappointed expectations. This tallies with what we’re hearing from some businesses about confidence returning.”

“With orders improving and the global economy heading for calmer waters, it looks like conditions for manufacturers may be on the up.”

Key findings

  • 15% of firms reported order books above normal (excluding seasonal variations), and 33% below, giving an overall balance of -20%. It remains in line with long-term average of -17%.
  • 10% of firms reported export order books above normal, 28% below, giving an overall balance of -17%, the highest level for three months (-11% in December) and well above the long-term average of -21%.
  • Output growth over the last three months was steady, with 28% of firms reporting volumes up and 27% down, to give an overall balance of +1% which is in line with expectations at the end of last year. There was strong growth in the three largest sectors – Food, Drink and Tobacco, Chemicals and Motor Vehicles and Transport Environment.
  • Output is expected to rise sharply over the next three months. Some 33% of firms predict increases and only 15% expect falls – an overall balance of +18%, the highest since April last year. The anticipated acceleration is broad-based, but driven primarily by the Food, Drink and Tobacco sector and Mechanical Engineering sector.
  • Average prices over the next three months are expected to fall back with 12% of firms reporting prices rising, and 8% predicting drops. The overall balance of +4% is the lowest for six months and a big drop from +21% in January and +20% in February.  This was driven almost entirely by inflation expectations in the Food, Drink and Tobacco sector falling from +59% to +2%.

 

 

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