Manufacturers confident in next quarter growth

New manufacturing orders fell slightly in the three months to April, but growth is expected next quarter, findings of the latest CBI quarterly Industrial Trends Survey suggest.

Domestic demand this quarter fell at the fastest pace January 2012, driving down new orders. Despite this, the manufacturers surveyed have increased their stocks of work in progress and finished goods in anticipation of a better quarter.

ONS statistics earlier in April showed that UK manufacturing had grown in February despite a fall in output during January. The CBI survey showed employment increased in-line with expectations in the three months to April, and manufacturers expect to hire in the next quarter.

Stephen Gifford, CBI Director of Economics, says this quarter was a mixed bag for manufacturers, with new orders disappointing because of a decline in domestic demand, but output did increase: “Firms are expecting to ramp up production in the coming quarter on the back of an expected rise in new orders.

“Although the weaker sterling has eased concern about international competitiveness, manufacturers highlight the potentially chilling effect of political and economic instability abroad on export orders, such as the Cyprus crisis.”

A balance of +18 percent of manufacturers expect total orders to increase next quarter, and +19 percent expect export orders to rise.

Concern about prices acting as a constraint to export orders in the next three months fell to the lowest since April 2012, as sterling depreciated by 4.2 percent between the January and April survey periods.

Respondents expected to spend more over the next year on product and process innovation (+26 percent), training (+13 percent) and plant and machinery (+four percent).