British manufacturing output rose at the fastest pace since the end of 2013, with firms confident of further improvements to come, a new survey shows.
The balance of firms reporting total order books increased in the past month jumped to nine per cent, well above the long-term average of a 15 per cent negative balance, according to the Confederation of British Industry (CBI).
Meanwhile manufacturers remained confident in production over the next quarter, with only 10 per cent expecting output to fall against 37 per cent looking forward to an increase.
Demand plunged last year in the aftermath of the EU referendum as firms prepared for financial chaos. However, the economy surprised analysts by accelerating in the second half of the year, buoyed by resilient consumer spending.
That buoyancy may be diminishing as rising inflation weighs on demand. The economy slowed markedly in the first quarter of the year, as the giant services sector struggled.
However, survey evidence in the smaller manufacturing industry, which accounts for 10.3 per cent of measured UK GDP, shows continued optimism. Markit’s manufacturing purchasing managers’ index (PMI) hit its highest point since 2014 in April.
Export volumes continued their recent strong performance with the joint-highest growth since December 2013, as the effects of a weak pound continue to make British products more attractive to overseas buyers.
The pick-up in global growth has also boosted the manufacturing industry.
Rain Newton-Smith, CBI chief economist, said: “The summer sun has come out early for Britain’s manufacturers. Robust demand at both home and abroad is reflected in strong order books, and output is picking up the pace.
“On the other side of the coin though, we have mounting cost pressures and expectations for factory-gate price rises are running high.”