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UK manufacturers are reporting healthy order books and expectations for output growth are above their long-run average, the Confederation of British Industry (CBI) says.
 
Meanwhile, pricing pressures have eased following strong inflation during the first two quarters of this year.
 
Of the 510 manufacturers responding to the CBI’s August monthly Industrial Trends Survey, 29 per cent of firms describe total orders as above normal, and 28 per cent say they are below.

The resulting balance of +1 per cent shows order books remain well above the long-term average of -18 per cent, and is an improvement on the previous month’s balance of -10 per cent.
 
While 24 per cent of firms say export order books are above normal, an equal 24 per cent say they are below. The resulting balance of 0 per cent compares with -8 per cent in July, and is also significantly above the long-term average (-21 per cent).
 
Expectations for growth in factory output over the coming quarter have picked up a little, with 31 per cent of firms predicting that production will rise in the next three months, and 17 per cent anticipating that it will fall. While the resulting rounded balance of +13 per cent remains above the long-term average (+6 per cent), it represents a continuation of the broader trend of moderating expectations since April.
 
Pricing pressures have eased in comparison with the first half of 2011 and remain fairly modest. 19 per cent of manufacturers predict that they will raise output prices over the coming quarter, and 10 per cent expect to lower prices. The resulting balance of +9 per cent is considerably lower than the much stronger expectations seen in the months prior to July.
 
However Richard Woolhouse, CBI Head of Fiscal Policy says, ‘[Despite this news], the risks to manufacturing activity and business confidence have if anything increased, due to market volatility and the recalibration of growth expectations worldwide. Concerns around growth in the US and the Euro area present further challenges to the manufacturing recovery.’
 

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