The latest monthly Industrial Trends Survey of 381 manufacturers found that export order books remained unchanged and above the long-run average.
It says that output continued to grow robustly in the three months to March, but at a slower pace than in the three months to February. Output growth was broad-based, increasing in 14 out of 17 manufacturing sub-sectors, with respondents anticipating that output growth will slow further over the next three months.
Expectations for output price inflation also continue to weaken, but remain above the historical average. Meanwhile, stocks were considered to be above adequate levels, moving above the long-run average for the first time since September 2016.
Looking ahead, strong global demand and the lower pound will continue to underpin demand for the manufacturing sector, CBI adds. But it is expected that consumer-facing companies and retailers will continue to struggle while household incomes remain under pressure from higher inflation.
Explains CBI’s head of economic intelligence Anna Leach: “Robust global growth and the low pound have gifted UK manufacturers a strong first quarter in 2018. Although total order books and output growth slipped relative to February, demand and output growth remain well ahead of long-run averages.
“Confidence among manufacturers will have been given an additional boost by the agreement of a transition deal, giving them the confidence to continue investing and planning for growth. Other hurdles on the Brexit path need to be cleared in the same spirit – this includes a speedy agreement of a mutually beneficial trade deal for both the UK and the EU, with a customs union one of the options on the table.”
Key findings:
29% of manufacturers reported total order books to be above normal, and 25% said they were below normal – giving a balance of +4%
19% of firms said their export order books were above normal, and 10% said they were below normal – giving a rounded balance of +10%
38% of businesses said the volume of output over the past three months was up, and 22% said it was down – giving a balance of +16%
Manufacturers expect output growth to slow in the coming quarter, with 34% predicting volumes to increase, and 21% expecting a decline – giving a balance of +13%
24% of companies expect average selling prices to increase in the coming three months, with 6% predicting a decline – giving a balance of +18%
27% of firms said their present stocks of finished goods are more than adequate, whilst 7% said they were less than adequate – giving a balance of +20%
