CBI survey shows healthy manufacturing order books

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CBI Monthly Trends May 2011 - .PDF file.

UK manufacturers expect strong output growth in the coming quarter, backed by healthy order books, the CBI said today.

Of the 432 manufacturers responding to the CBI’s latest monthly Industrial Trends Survey, 22 per cent described total order books as above normal, while 24 per cent said they were below normal. The balance of -2 per cent is said to be well above the long-term average and an improvement on the previous month’s balance of -11 per cent.

In a statement, the CBI said the volume of export order books also picked up in May with 19 per cent of firms saying they were above normal and 22 per cent below normal.

The -3 per cent balance is above the long-term average and consistent with a trend of improvement that has been evident over the past two years.

With demand improving, manufacturers predict robust output growth in line with previous months; a balance of +20 per cent of firms expect output to rise in the next three months, compared with +22 per cent in April.

According to the survey, price pressures have moderated, although they do remain a concern. A balance of +24 per cent of manufacturers are predicting they will raise output prices over the coming quarter, following +36 per cent in April. This is the lowest expected rate of increase since January, but is still strong compared with last year.

Ian McCafferty, CBI chief economic adviser, said: ‘Although there has been talk recently that the manufacturing recovery may be starting to flag, our survey shows manufacturers are still seeing solid growth in activity.

‘Total and export order books are both well above their long-run averages and, with demand healthy, firms are predicting another strong rise in output.’