UK manufacturers saw demand for their goods continue to improve in August, as overseas orders returned to normal levels, the CBI revealed today.

Of the 485 companies that responded to the latest CBI monthly Industrial Trends Survey, 21 per cent of manufacturers said that total orders were above normal and 34 per cent said they were below. The resulting balance of -14 per cent is the highest since August 2008 (-13 per cent) and a slight improvement on July’s balance of -16 per cent.

Some 24 per cent of respondents reported exports to be above normal and 24 per cent below normal, which gives a balance of -1 per cent, compared with -12 per cent in the July survey.

With overall demand for UK-made goods continuing to improve, manufacturers expect production to rise further over the next three months. Some 30 per cent predict that output will increase, while 20 per cent anticipate a fall. The resulting balance of +10 per cent is an improvement on expectations in July (+6 per cent), with predictions for manufacturing production edging higher after weakening over the past two months.

However, according to the survey, price pressures are ongoing within the manufacturing sector, with a balance of 11 per cent of companies expecting to raise prices, compared with +5 per cent in the previous survey. Meanwhile, stock-levels adequacy was broadly unchanged (+1 per cent) for the second month running. The balance is the lowest since June 2007 (-2 per cent).

‘Prospects for the manufacturing sector remain very positive,’ said Lai Wah Co, CBI head of economic analysis. ‘Demand is steadily improving, helped by the revival of export orders after some weakness last month, and manufacturers expect slightly stronger production growth in the three months ahead. However, inflationary pressures within the sector have not fully faded and firms are predicting a faster rise in output prices over the next quarter.’