Both domestic and export new orders were near-flat, but that represented an improvement on the previous quarter when orders fell. Manufacturers do expect some growth in domestic new orders and output over the next quarter, but export new orders are expected to remain flat and optimism about the overall business situation declined a little further, according to the 465 firms surveyed.
Total unit costs and domestic prices both fell back slightly over the three months to January. Competitiveness abroad for manufacturers remains under intense pressure with sixteen of 18 sub-sectors saying that their competitiveness in the EU was down on three months ago. Export output prices continue to post falls with firms’ competitiveness outside the EU also continuing to worsen.
Investment intentions have improved though, and firms plan to invest more in training and product innovation over the next twelve months.
Rain Newton-Smith (pictured), CBI director of economics, said: “Manufacturers have seen a flat start to 2016 but while we have seen real problems in some industries in the last few months, there are signs that orders and production are stabilising overall.
“Uncertainty around the prospects for global growth, uncompetitive energy costs and the strength of the pound have all played their part in UK manufacturers finding conditions tough when trying to sell overseas.
“Over the longer term, strong investment in innovation and skills is vital to boosting our performance in exports, so it’s great to see firms planning to invest more in training and products over the next year.”
The survey found that 23% of businesses reported an increase in total new order books and 27% a decrease, giving a balance of -4% (October saw -8%). Almost a fifth (17%) of businesses reported an increase in domestic new orders, with 20% noting a decrease. The balance for domestic orders (-3%) was in line with the long-run average (-5%) and above the result in October’s survey (-11%).
Encouragingly, 18% reported an increase in export orders, with 20% signalling a decrease. The resulting balance for export orders was -2%, much improved from October (-17%). Other finding included:
- 21% of manufacturers said headcount was up, and 18% said it were down, giving a balance of +3%, the same result as the previous quarter
- 22% of firms reported a rise in output volumes, and 24% a decrease, giving a balance of -2%, below the average of +1%.
- Manufacturers’ investment intentions for the year ahead rebounded across the board - buildings (balance of -3%) plant and machinery (+3%), product and process innovation (+13%) and training and retraining (+24%)
- Competitiveness abroad deteriorated with a fourth-consecutive large fall in competitiveness in the EU (balance of -17%).
- Competitiveness outside the EU also fell (-9%), but had improved on the previous quarter (-15%)
Around a quarter (24%) of manufacturers expect total new orders to increase, and 16% expect them to decrease, giving a balance of +8%.
Domestic orders are also expected to improve (21% expect an increase, and 13% a fall, giving a rounded balance of +7%), and new export orders should stabilise further (+3%)
