CBI announces boom in manufacturing output

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The manufacturing sector saw output rise at the fastest rate in 15 years in the three months to July, as demand for UK-made goods continued to strengthen and firms rebuilt their stocks, the CBI said today.

But the UK business group said that the pace of manufacturing growth is expected to be slower in the coming quarter.

Of the 439 manufacturers that responded to the CBI’s Quarterly Industrial Trends Survey, 38 per cent said output rose during the last quarter, while 15 per cent said it fell. The increase of 24 per cent is the fastest growth since April 1995, which saw an increase of 26 per cent, and a marked improvement on the previous quarter’s flat performance, up just one per cent.

A strong rise in home-grown orders helped boost output. 29 per cent of firms said the volume of domestic orders rose and 19 per cent said they fell, giving an increase of 10 per cent − the strongest since April 2004, which saw an increase of 12 per cent. Overseas demand was buoyant, with 28 per cent of firms reporting a rise in export order volumes and 11 per cent a decline.

As a result, the volume of total new orders, which reflects combined domestic and overseas orders, rose by 18 per cent.

The rise in output was also driven by a shift in the stock cycle, which saw firms building up inventories of raw materials and finished goods.

Looking ahead to the next three months, manufacturing output is expected to rise again, although at a slower pace − up just six per cent − as growth in domestic and export orders is expected to moderate.