Manufacturing set for boost on exports growth
MANUFACTURING output is set to rise over the next three months on predictions of a strong increase in export orders, new data suggests.
The CBI said of the 420 manufacturers that responded to its latest Quarterly Industrial Trends Survey, 32% expected a rise in output volumes, and 14% a fall, giving a balance of +18%. This follows a figure of +9% for the last three months.
The optimism is based on expectations of a faster increase in exports in the coming quarter, with a balance of +15% expecting volumes of export orders to rise. Domestic order growth is more subdued with a balance of +2% expecting an increase.
Looking ahead to the next quarter, the volume of total new orders is expected to grow to a balance of +12%, similar to the +11% recorded for the past three months.
The expected predictions of strong output growth follow a slightly softer patch over the past three months, as the temporary boost to second-quarter output from the turn in the stock cycle faded and thoughts turned towards the Government’s Comprehensive Spending Review and its likely impact.
Following four consecutive quarters of rising optimism, overall business sentiment was little changed on three months ago. The survey showed 24% of manufacturers were more optimistic than the past quarter, and 23% said they were less so, giving a rounded balance of +2%.
Employment and investment trends in the manufacturing sector are also positive, concluded the study. Employment saw its biggest rise since January 1989 with a balance of +6% of firms saying that they had taken on new staff.
In addition, investment intentions for the coming year have strengthened further. Manufacturers said they planned to spend more on plant and machinery over the year ahead: a balance of +10% said they would increase capital expenditure in this area, with investment plans at their strongest since July 1997 (+21%).
Furthermore, fewer manufacturers (41%) thought uncertainty about demand would limit their investment plans over the next 12 months. This is the lowest figure since January 2008 (41%) and compares with 54% for the previous quarter.
Ian McCafferty, the CBI’s Chief Economic Adviser, said: “The recovery in the manufacturing sector is well grounded and looks set to continue, despite a soft patch last quarter, when production growth slowed as firms had expected.
“Over the next three months, firms predict a strong rise in output driven by predictions of firmer export orders growth, while support from stockbuilding fades.
“It is particularly encouraging that firms have taken on more staff and plan to invest more in plant and machinery in the year ahead.”
