The survey, of over 470 firms, also found that demand for UK-manufactured goods strengthened in the same period. The mechanical engineering and metal products sectors led the way as output expectations hit their highest level since September 2013.
Over a quarter (27%) of businesses reported total orders to be above normal, while 19% said they were below normal. The balance of +8% is the highest since February 2015, where the balance sat at +10%.
However, export orders fell slightly, although remained above the long-run average, with 19% of businesses reporting export orders to be above normal, and 29% below, resulting in a balance of -10%.
Price rises are also a concern, with 38% of companies expecting to have to raise prices in the next three months, compared to just 6% who will cut them. The resulting balance of +32% is the highest since April 2011.
“Stronger demand and production is good news for UK manufacturers, though the weaker pound continues to push input costs and this is now feeding through to output price inflation expectations,” said Rain Newton-Smith, chief economist at the CBI. “With cost pressures building, businesses will be looking to the Budget for relief from business rates, specifically bringing forward the adjustment from RPI to CPI. Over the longer term, investment in education and innovation as part of the Government’s Industrial Strategy will really need to deliver in the face of increasing political headwinds.”
