Manufacturing orders grow at fastest rate in three years

The survey of 367 manufacturers found that growth in total order books and domestic orders was the most rapid since April 2011. Output growth remained solid, albeit slightly lower than that recorded in November and December. Manufacturers are optimistic about continued expansion in the next quarter, with expectations of growth in new orders at its strongest since April 2012. Manufacturing companies are increasingly confident in the recovery, which is feeding through to investment plans. Optimism about business conditions rose strongly, while the number of firms feeling that demand uncertainty was constraining investment dropped back sharply. Firms' plans for growth in capital expenditure on buildings in the year ahead were the highest in three years. Stephen Gifford, CBI director of economics, said: "The recovery in the manufacturing sector is continuing to build and confidence has improved. Growth in the volume of total new orders has reached its highest rate since April 2011, and this is encouraging. "However, now is not the time to relax and take our foot off the gas. There are still risks ahead and our manufacturers need help to break into high-growth export markets." Almost a third (31%) of businesses said they were more optimistic about the general business situation than three months ago and 10% less, giving a balance of +21%, little changed from October's 18 month-high of +24%. The CBI also reported that 34% of businesses reported an increase in total orders and 21% a decrease, giving a balance of +13%, the highest since April 2011 (+20%). The balance for new domestic orders (+11%) was the highest since April 2011 (+15%), but the balance for new export orders (0%) was down on the three months to October (+3%). Almost two fifths (38%) of firms reported a rise in output volumes and 20% a decline, giving a balance of +18%. This is weaker than the +29% balances recorded in November and December, but still well above the long-run average of +2%. Domestic and export output prices changed little this quarter (+2% and -4% respectively) while unit costs grew a little (+7%).