UK manufacturing stronger in August

UK manufacturers are seeing industry conditions improve and new orders strengthen, new data shows.

Total order books at manufacturing firms were above normal for a third of respondents to the Confederation of British Industry’s manufacturing survey in August.

Manufacturers were also optimistic about the outlook, with almost a third expecting their production levels to rise in the next three months.

Order books were still below normal for 29 per cent in August, but this created a net balance of +1 per cent from all respondents.

That was far above the recent trend, which has been depressed at an average -18 per cent for months. In July a net ten per cent said their total order books were below normal.

Export order books showed a similar rise: about a quarter of manufacturers said orders were above normal while another quarter said they were below normal.

The balance of 0 per cent was higher than the net eight per cent that felt exports were lower than normal in July.

Fears over inflationary pressures also eased in August as oil and commodity prices fell back.

While 19 per cent of manufacturers said they expected to raise prices in September, ten per cent said they would lower prices, leading to a net nine per cent balance for price rises.

But Barclays Capital analyst Simon Hayes said the survey data could lag other industry data such as purchasing managers’ indices.

“The headline total orders balance… has been relatively stable this year, in marked contrast to the manufacturing PMI, which has dropped like a stone over the period,” Hayes said.

“It is also striking, however, that the PMI has tended to lead movements in the CBI survey, suggesting the robustness of the CBI survey in August may be an issue of timing rather than a sign of fundamental strength.”