UK manufacturing output remains stable - CBI

The new data suggests that both orders and output are likely to rise moderately over the next three months, and the employment and investment picture continues to look relatively positive. Of the almost 400 manufacturers responding to the survey, 25% reported that total new orders had risen, while 28% said they fell. Export orders continued to fall for the third consecutive quarter, against expectations that they would stabilise. However, manufacturers anticipate a resumption of growth in export orders in the coming three months, underpinning fairly robust expectations for total orders. Output growth underperformed against expectations once again and was broadly flat for the second consecutive quarter. Manufacturers expect to raise output in the next quarter, although this represents the lowest expectation since October 2011. CBI head of economic analysis Anna Leach said: "While domestic demand and business optimism have steadied, export demand remains a concern for manufacturers, with orders continuing to fall, albeit at a slower rate. There are encouraging signs of stability in overall demand, however, with domestic orders, export orders and production expected to rise in the quarter ahead." More than half the firms surveyed cited price competition from overseas competitors as a factor likely to limit export orders in the next three months. This is the highest proportion since July 2008. Concerns around political and economic conditions abroad also remained high. Manufacturers also expressed concerns that uncertainty about demand could limit capital expenditure authorisations over the next year. However, employment and investment indicators in this survey are somewhat better. Numbers employed were flat, beating slightly negative expectations with manufacturers expecting to increase headcount in the coming three months. Robin Johnson, head of industrial engineering at law firm Eversheds, welcomed the survey results, saying: "Within the global manufacturing economy, these are actually good figures. Anything which shows evidence of growth at a time when eurozone manufacturing is under pressure is encouraging." The weakening of sterling against the euro brought uncertainty, he added, "but, while import costs will again increase, exports should benefit as a result of this. However, manufacturers need to ensure they have robust hedging strategies".