Britain’s manufacturers are basking in the summer sun as they report the strongest order books since 1988, according to a closely watched survey of UK industry.
More than a quarter of manufacturers said total orders were above normal, with only 12 per cent below par, the Confederation of British Industry (CBI) reported.
Food, drink, tobacco and chemicals were among the main sectors which outperformed. Meanwhile, much of the boost for manufacturers has been caused by the strong performance for exporters.
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The balance of firms reporting increased export orders jumped to the highest level since 1995, with products markedly more attractive in devalued sterling over the past year. Sterling remains more than 15 per cent cheaper than its pre-EU referendum peak, before it fell sharply after the vote.
Manufacturing firms are generally believed by economists to be able to react quicker to devaluations in currency by boosting exports, making them the biggest beneficiaries of a devaluation.
Rain Newton-Smith, CBI chief economist, said: “Britain’s manufacturers are continuing to see demand for ‘Made in Britain’ goods rise with the temperature. Total and export order books are at highs not seen for decades, and output growth remains robust.”
Output growth over the last three months eased back, although the balance of firms reporting better-than-average production remained at 15 per cent, considerably higher than the three per cent long-term average.
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The manufacturing industry’s strength stands slightly apart from the broader UK economy. Manufacturing produces just over 10 per cent of British annual output, which is dominated by the services sector.
The figures showed “healthy domestic demand despite concerns of a stuttering UK economy”, according to Howard Archer, chief economic adviser to the EY Item Club.
However, survey evidence has not yet been backed up by production data from the Office for National Statistics in recent months, with output only increasing by 0.2 per cent during April.
Archer said: “Official data suggest that the manufacturing sector is far from guaranteed to see even modest growth in the second quarter.”