Region’s manufacturers see order growth
STRONG international demand for British-made goods drove growth in new orders in most UK regions, according to the latest quarterly Regional Trends Survey published today by the CBI and Experian.
However, the deteriorating economic outlook has depressed confidence in manufacturing businesses across the UK and, as costs continue to surge, virtually all regions plan to raise their prices in the coming quarter.
Over the last three months, total new orders rose at the national level. This was the fifth survey in a row to show growth, with Yorkshire & the Humber, the South East & London and Wales leading the way. Only Northern Ireland and the North East saw more than a marginal decline.
The national figure was underpinned by healthy export orders as most regions reported an increase. The strongest export gains were seen in Yorkshire & the Humber, Wales and the East Midlands.
Only Northern Ireland, the North East and the North West reported a drop in overseas demand. However the North East expects a rebound in export orders next quarter, with the strongest expectations of all the regions.
Elsewhere, the forward-looking picture is mixed. A total of six regions expect export orders to increase in the next three months. The West Midlands is firmly upbeat, with its strongest export order expectation since 1994, underpinning an overall optimism for new orders. The East of England, on the other hand, predicts large declines in both export and overall orders.
While export orders are expected to decline in the North West and Northern Ireland,their expectations for total new orders are among the strongest for all the regions.
Reflecting the economic uncertainty in both the UK and abroad, every UK region reported a decline in general business confidence. This was particularly sharp in Northern Ireland, the West Midlands, Yorkshire & the Humber and the South West.
Input costs have increased markedly in every region across the UK over the past three months. However, apart from in Wales, manufacturers were able to push through domestic price rises to help mitigate the squeeze on profit margins.
Growth in output has continued over the past quarter in most regions. The firm increase at the UK level was boosted by strong growth in Yorkshire & the Humber, the North West and Wales.
Expectations for output in the next three months are also quite encouraging. Most regions expect output to increase, with Scotland and the West Midlands looking forward to good growth. Only in the North West, Wales and Yorkshire & the Humber is output expected to decline, and in all three cases only modestly.
Peter Gutmann of Experian said: “The survey results provide some encouragement at a testing time. Most regions are quite upbeat about orders and exports for the next three months. Perhaps manufacturers are pinning their hopes on the boost to UK competitiveness from sterling's near 10 per cent depreciation against the euro since November as an offset to slower growth in the Eurozone.”
CBI principal economist Lai Wah Co said: “Though manufacturers' confidence is undoubtedly suffering, demand – especially from overseas – is holding up better than expected in most regions.
“Rapid rises in oil, commodity and food prices are driving ever-increasing input costs for manufacturers. However, most UK regions still feel able to raise their prices to help ease the pressure on profit margins.”
