Output to grow but factory gate prices will rise, says CBI
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UK manufacturers' expectations for output growth are at their strongest for a year, but firms also expect to have to raise prices significantly, the CBI said today.
Four in 10 respondents to the CBI's latest monthly Industrial Trends survey believe that output will rise in the next three months, while just 15% expect it to fall. The resulting balance of +24% is the strongest since March last year.
Order books in March remained well above average, albeit a little lower than last month. Likewise, export demand weakened but remained considerably above its long-run average.
However, expectations for output price inflation have picked up with almost a quarter of firms – the highest number since last June – expecting to put prices up in the coming quarter.
CBI chief economic adviser Ian McCafferty (pictured) concluded that the recovery in the manufacturing sector seemed to be building some momentum. He continued: "Firms again expect a strong rise in output over the next three months, on the back of above-average order books.
"However, expectations for output price inflation have also moved higher, most probably reflecting the recent rise in oil prices.
"Any further rise in oil prices would be a significant concern, given the additional cost burden this would place on UK manufacturers and the knock-on effects it could have on the nascent recovery."
The March survey surveyed 436 manufacturing businesses between 22 February and 14 March.
