The CBI has reported this week that UK manufacturing order books are at their healthiest level for over three years, with both domestic and export orders improving sharply last month.
The CBI’s latest monthly industrial trends survey shows the fledgling manufacturing recovery living up to firms’ confident expectations, with demand and output picking up despite the growing strength of sterling.
Of the 803 manufacturers who responded, 21 per cent of firms said total orders were above normal and 29 per cent said they were below. The balance of minus eight per cent compares with minus 15 per cent in the previous survey and is the strongest result since December 2000.
Twenty per cent said export orders were above normal while 27 per cent said they were below. The balance of minus seven per cent compares with minus 22 per cent in February and marks the least negative result since November 1996.
The strength of sterling has not as yet had a noticeable impact on export order volumes, but domestic prices are coming under pressure as competition from cheaper imports increases.
Output expectations remain strong and the positive trend for 2004 compares well with last year’s results. Stock levels are lean, providing support for further acceleration in output over the coming months.
Ian McCafferty, CBI Chief Economic Adviser, said: “The manufacturing recovery is gaining strength, with demand improving domestically and globally. The value of sterling is yet to have an impact on export orders, though manufacturers will be concerned if the pound strengthens further. Competition from cheaper imports has however renewed the downward pressure on domestic output prices.”