The survey of 459 manufacturers also showed that competitiveness in EU markets rose by 34%, the fastest pace since the advent of the survey in 2000; non-EU competitiveness rose at the highest rate since 2009 (17%).
Back at home, the domestic market saw modest growth, with export orders rising for the first time in more than a year. For the next three months, the outlook is generally positive, with export orders expected to rise even more. However, concerns remain over the availability of skilled labour, with almost a quarter of respondents warning that a lack of skilled workers may limit their output over the next few months.
Last quarter saw a sharp decline in optimism about the wider business situation (-47%), and this quarter saw a slight drop again: a fifth (20%) of firms said they were more optimistic now, but 28% said they were less optimistic, giving an overall balance of -8%. The number of people employed fell for the first time in six years and look set to fall faster in the next quarter. Despite this, investment intentions have improved, and plans for the next 12 months look set to be firmly ahead of their long-run averages.
The weaker pound following the Brexit vote has led to the steepest rise in unit costs for three years, and are set to continue on this trend for the next quarter at least. Despite the rise in exports following the drop in sterling, the majority of exporting manufacturing firms have said that the fall in the pound has had a negative impact on their business.
“Manufacturers are optimistic about export prospects and export orders are growing, following the fall in sterling,” said Rain Newton-Smith, chief economist at the CBI. “However, the weaker pound is also feeding through to costs, which are rising briskly and may well spill over into higher consumer prices in the months ahead.”
The CBI also called on government to “implement a new migration system that meets the needs of business while responding to clearly stated public concerns. Maintaining a preferential route between the UK and the EU, our largest trading partner, will be important.”
