Robust recovery continues, but costs ‘rocket’

The industrial trends survey of 451 manufacturers showed strong domestic and exports orders have boosted factory output, but inflationary pressures continue to bite and firms are passing on the soaring cost of raw materials with higher factory gate prices. More than one third (36%) of respondents said they had seen an increase in output in the last three months, while 15% said it had fallen. Manufacturers recruited more staff for the third quarter running. The net number of companies saying that they had added to their workforces in the last three months (+15%) was the highest since January 1974 (+21%). The outlook for employment over the next quarter is also positive, with a balance of +7% of firms expecting to recruit. But production costs have risen rapidly. A balance of +53% said average unit costs had gone up, and firms expect costs to continue to rise in the coming quarter. John Cridland (pictured), CBI director-general, said: "The manufacturing recovery remains firmly on track. Strong demand at home and abroad and rapid restocking over the past quarter have led to another solid rise in production, with growth expected to continue over the next quarter. "It is also good news that manufacturers are continuing to take on more staff to handle the increased workload. "But production costs have jumped markedly during the last three months, rocketing ahead after a full year of already rapid cost inflation. This is unsurprising given the recent surge in oil and other commodity prices."