UK Manufacturing Sees Strong Growth in Last Quarter
Posted by siteadmin on Monday 1st of May 2017.
Following the recent quarterly CBI (Confederation of British Industry) Industrial Trends Survey of 397 UK manufacturers, Rain Newton-Smith, the Chief Economist of the CBI commented: “UK manufacturers are enjoying strong growth in demand from customers in the UK and overseas, and continue to ramp up production.”
The results indicated that domestic order books improved at their fastest rate (20%) in the three months ending April 2017, since July 2014 and that export orders also saw their greatest growth (22%) for six years.
42% of respondents reported an improvement in their order books, whilst only 17% said they had seen a fall. Therefore, the net improvement of +25% was the highest level seen since April 1995, when the comparable figure was +27%.
The consensus opinion is that the immediate weakening of Sterling following the Brexit vote, created a growth in competitiveness for them, particularly within the European Union. However, the currency devaluation proved a doubled-edged sword, as the weaker pound pushed up production costs to a six-year high.
Employment rates in manufacturing also improved, with 26% of companies reporting an increase in their employee numbers, while 19% reported a drop, to show a net improvement of +7%. Overall, in the near-term, hiring intentions for the next quarter “are muted”.
Rain Newton-Smith added that: “Exports have surged and firms are at their most optimistic about selling overseas in over four decades. Even so, the combination of the weak pound and recovering commodity prices means that cost pressures continue to build, and manufacturers report no sign of them abating over the near-term.”
Having said that there appeared to be a weakening in overall capital investment plans, especially for plant and machinery, at its lowest level for close to six years. Most respondents cited weak potential net returns as the most demanding issue in this respect.