MANUFACTURING data gave economists something to smile about yesterday as it emerged that UK factory orders delivered their strongest performance since mid-2008 in the month of May.
The CBI’s monthly industrial trends survey showed that the total factory order book balance increased to –18 this month, up from –36 in April and beating expectations of a reading of –32. That signifies that 18 per cent of firms reported orders to be below normal – back in line with the long-term average.
Export order book data in particular showed an improvement, recording its first positive survey balance for over two years. Twenty-seven per cent of manufacturers said export order levels were above normal, with just 24 per cent saying they were below.
Ian McCafferty, the CBI’s chief economic adviser, said: “The weak pound has made UK exports more attractive, and manufacturers are benefiting from the pick-up in world trade. This is helping the recovery in manufacturing, and a slightly stronger rise in production is predicted in the coming months.”
A net 17 per cent of firms expect production to strengthen over the next quarter.
However, the CBI warned that inflationary pressures remain “significant”, with a balance of 14 per cent of firms expecting prices to rise over the next three months.