UK manufacturers’ hopes for an economic rebound rose to their highest levels in nearly half a century this month as Britain slowly began its exit from Covid-19 lockdowns.
According to the latest CBI quarterly Industrial Trends survey, its quarterly business optimism gauge jumped to +38, its highest level since April 1973.
In January, amid the height of the UK’s third lockdown, by comparison, the index stood at -22.
Rain Newton-Smith, CBI chief economist, said: “Manufacturers have reported the biggest increase in optimism in nearly 50 years in this month’s quarterly survey. Phased reopening has lifted the mood among firms, notably driving orders, employment, and investment plans.”
Along with the surge in optimism, the survey also found that firms were planning to raising their spending in the coming months.
At last month’s Budget, the government announced a tax “super-deduction” on investment on machinery and other equipment, which may encourage more firms to spend.
The CBI suggested that investment intentions for plant and machinery were at their strongest since July 1997.
Although output volumes were largely flat at 3.0 per cent, manufacturers are expecting a 36 per cent jump next quarter.
Likewise, they expect both orders and headcount to increase around 20 per cent over the coming three month period.
Tom Crotty, group director at Ineos and chair of the CBI Manufacturing Council, said: “It’s hugely welcome to see manufacturers planning to invest more in their businesses following what has been an extraordinarily difficult period for the sector.
“After all, a more productive manufacturing sector can be an engine for the UK’s economic renewal and long-term growth.”