Booming factories beginning to reach the limits of their capacity

BULLISH manufacturers are increasingly running up to the limits of their capacity, according to a new survey today, despite the sector’s output being depressed in comparison to the pre-crisis period.

The British Chambers of Commerce (BCC) today said that capacity utilisation in UK ind­ustry was at its highest on record, according to its quarterly update.

Manufacturers are also reporting the highest confidence in their profitability and the highest domestic sales in 25 years. Despite the suggestion that factories now have little spare capacity, production is still around 10 per cent below previous peak levels.

The survey shows that other businesses are still confident about their own situation and the economic climate. However, the strength of the recovery is raising concerns about interest rate hikes – 18 per cent of manufacturers expressed concern, along with 22 per cent of services firms, both up from the previous quarter.

Despite the positive picture for the UK overall, the proportion of businesses reporting higher than lower investment and exports dipped from a particularly high first quarter result.

“While we never like to report even modest declines in our invest­ment and export balances, these are unsurprising, as the economy jolted forward last quarter and has now settled into a period of more stable growth,” said John Longworth, BCC director general.