Orders from UK factories bounce back

 
Julian Harris
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BRITAIN’S manufacturing sector received another boost yesterday, as a leading business survey revealed “above normal” orders for the first time in three years.

Yet spiralling prices continue to haunt the industry, with firms expecting inflationary pressures to worsen in the coming months.

Over a quarter – 26 per cent – of respondents said that orders were above normal, with 21 per cent reporting below normal levels – leading to a positive balance of five per cent, the Confederation for British Industry (CBI) said.

“The manufacturing recovery is picking up pace, with firms predicting robust output growth over the next quarter,” said CBI economist Ian McCafferty.

The upturn was greater than economists expected, helped by an improvement in domestic demand.

Orders for export declined to a positive balance of five per cent, from +11 per cent last month, yet remain “strong by historical comparison,” the CBI said.

“At least the chancellor is currently receiving consistently good news on manufacturing output, which reinforces the economic rebalancing argument,” said Investec’s Philip Shaw.

However, inflation expectations are now close to their last peak in July 2008, the CBI revealed. A positive balance of +33 per cent of firms expect they will have to raise prices in the next three months.

Inflation expectations among factory officials have shot up in recent months, according to the CBI data.

In October, the positive balance expecting price hikes was just six per cent.