Growth in the UK’s manufacturing sector continued to strengthen with order books and output touching an 18-year high for the second consecutive month, according to the latest CBI Industrial Trends Survey.
The survey of nearly 400 manufacturers found that the size of total order books and the pace of output growth over the past three months were once again the highest recorded since 1995.
Export orders also rose considerably, reaching their strongest level for 22 months, with the improvement mainly driven by the chemicals, motor vehicles and transport equipment sectors.
Growth in output volumes over the three months to December remained robust, with another steep rise across most sectors – 14 out of 16 sectors reported growth with motor vehicles & transport equipment the largest contributor.
Manufacturers expect output growth to continue over the coming three months although at a somewhat slower pace.
· 35 per cent of firms reported that total order books were above normal in December and 23 per cent said they were below, giving a balance of +12 per cent, the highest balance since February 1995 (+13 per cent)
· 34 per cent reported that export order books were above normal in December and 23 per cent that they were below, giving a balance of +11 per cent, well above the long-run average of -20 per cent
· Growth in the volume of output in the three months to December was unchanged from the three months to November, when it was at its fastest rate since January 1995 (+29 per cent balance), with 50 per cent reporting it had gone up and 21 per cent down
· Firms expect output growth to continue at a firm but somewhat slower pace in the next three months: 35 per cent expect to raise output and 19 per cent expect to reduce output, giving a balance of +16 per cent
· Output price expectations (+11 per cent) rose to the highest level since February 2013 (+20 per cent), with 20 per cent stating average prices at which domestic orders are booked were up and 9 per cent down
· Stock adequacy of finished goods (+8 per cent) was below average (+14 per cent) for the fourth consecutive month.