Food and drink rebound boosts output growth

A REBOUND in the food and drink sector has helped to boost manufacturing output growth, latest figures from the CBI have shown.

In its latest monthly Industrial Trends Survey, the business organisation polled almost 500 companies around the UK.

The survey found that a rebound in the food and drink sector, following the severe  flooding earlier this year, drove an increase in overall output in the three months to May.

However, excluding food and drink, the output balance was stable, with the other 17 manufacturing sectors showing minimal movement.

Total orders rose slightly and exports orders were largely unchanged, with both remaining above their respective long-run averages.

Meanwhile, it said little change in prices was expected in the months ahead and output expectations remained strong.

Rain Newton-Smith, CBI Director of Economics, said: “Conditions in the manufacturing sector seem to be a little better overall, with improving order books compared with a couple of months ago. But domestic and global uncertainty remains high, alongside lacklustre export demand.

“Despite recent choppiness in emerging markets, China and India remain significant sources of potential demand. An exports commission would enable exporters to better exploit the growth opportunities provided by these and other growth markets.

“Manufacturers need to work in partnership with the Government to embrace long-term opportunities and trends, particularly in digital. A greater focus is also required on developing the right skills in the sector, managing energy costs, and encouraging further R&D investment.”

Commenting, Kevin Caley, founder and chairman of Tamworth-based peer-to-peer lender ThinCats, said: “Today’s CBI figures show that the decline of Britain’s embattled manufacturing sector has been somewhat arrested, however only time will tell if this improving sentiment translates into a sustainable recovery.

“While the sector has expressed optimism over future output, industrial firms are still facing all sorts of challenges in obtaining finance, with weak export demand and political uncertainty making this all the trickier.

“Many smaller manufacturers have realised that the best route to finance, and ultimately growth, is no longer the well-trodden one, which is why we’ve seen a rise in manufacturers using our platform to obtain a loan from their peers.”

Key findings:
•    16% of businesses reported an increase in total orders (up from -11% in April), and 24% a decrease, giving a balance of -8%
•    15% of businesses reported an increase in export orders and 29% a decrease, resulting in a balance of -14%
•    36% of businesses reported a rise in output volumes, and 23% a decrease, giving a rounded balance of +12%, up from +1% last month
•    Output is expected to increase over the next three months, with 32% companies suggesting a rise and 12% expecting a decrease, leaving a balance of +20%
•    Average prices are expected to fall over the next quarter, with 15% companies indicating an increase and 13% suggesting a decrease, giving a balance of +2
•    13% of businesses reported stocks as more than adequate, and 4% less than adequate, leaving a rounded balance of +10%.

Close