Manufacturing back on track

Julian Harris
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BRITAIN’S resurgent factory sector remains on track for a strong recovery, according to the latest industrial trends survey from the Confederation of British Industry (CBI).

Order books jumped to well above the long-run average for the survey this month, up nine points from April.

Total orders rose to a two per cent negative balance (from -11 per cent) while export orders rose to a three per cent negative balance (from minus six per cent).

Order books recovered well but remain below March’s seemingly one-off peak, when a positive balance of five per cent of respondents reported “above normal” demand.

“The Bank of England’s agents survey out yesterday gave a similar message,” said Citigroup’s Michael Saunders. “With exports growing very rapidly and business investment also recovering quickly, the UK manufacturing sector is likely to continue to boom.”

Manufacturers are optimistic of further improvements. One third expect output to increase over the next three months, compared to just 13 per cent who expect it to fall.

While expectations for output prices eased in the survey, “inflationary pressures remain a concern”, said the CBI’s Ian McCafferty.

One third of respondents still expect to be charging more for domestically ordered goods over the next three months, with only one in ten saying they will drop prices.

“Pricing expectations remain well above their long-run average,” the report said.

The measure of current output slowed for the second straight month, but the positive balance of 20 per cent remains well above the long-run average of seven per cent.