Order books recovered and output volume increased at the fastest pace since December 2017, broadly in line with expectations. The majority of sectors (14 out of 17) saw growth, with the mechanical engineering and food, drink and tobacco sectors leading the way. In total, 43% of businesses said the volume of output over the past three months was up, compared to 13% who said it was down – giving a balance of +29%.
Total order books returned to the healthier levels last seen at the end of 2017, while export orders remained stable and well above average, in line with the past 16 months.
However, manufacturers expect output growth to slow slightly in the coming quarter, with just 30% predicting volumes to increase and 12% a decline, giving a reduced overall balance of +18%. Expectations for output price inflation softened to the weakest in almost a year, while stock levels moved back below the long-run average.
The CBI predict that overall economic growth will remain subdued, regardless of the relative success of the manufacturing sector, due to weak consumer income growth and investment being held back by ongoing uncertainty.
“The recovery in orders and a return to bumper growth in production suggests the lull in manufacturing activity may be over,” said Anna Leach, head of economic intelligence at CBI. “While risks to demand persist from Brexit and escalating global trade tensions, firms can work with the government to nurture a pro-enterprise environment that helps UK growth to shift up a gear. There is much within the UK’s control that can be acted on now to lift UK productivity, from building a third runway at Heathrow to investing in the skills of the future.”
“Improvements in order books and strong output growth are good news for UK manufacturers, particularly after the slowdown that we had seen since the beginning of the year,” added Tom Crotty, group director of Ineos and chair of CBI’s Manufacturing Council. “But uncertainty remains elevated, from both Brexit and anti-global trade rhetoric. It is becoming increasingly important for the Government to provide more clarity to UK businesses so that they can better compete at home and globally.”
