Manufacturing output grew while total orders remained steadfast, according to the latest monthly Industrial Trends Survey conducted by the Confederation of British Industry (CBI).
The survey of 505 firms found that export order books in the month to 23 August reached a two-year high, suggesting that the depreciation of sterling since the end of last year may be increasing overseas demand for British exports.
The key findings included:
- 19% of businesses reported total orders to be above normal (compared with 18% in July), and 24% said orders were below normal, giving a balance of -5%
- 21% of businesses reported export orders to be above normal and 27% below, resulting in a balance of -6% – the highest since August 2014 (-3%)
- 34% of businesses reported a rise in output volumes, and 23% reported a fall, giving a rounded balance of +11%, down from +16% last month, but better than expected (+6%)
- Output growth is expected to remain steady over the next three months, with 30% of companies expecting a rise and 19% expecting a fall, giving a balance of +11%
- Chemical manufacturers accounted for just over half the improvement in export orders.
Anna Leach, Head of Economic Analysis and Surveys at the CBI, said: ‘It’s good to see manufacturing output growth coming in stronger than expected, and some signs that the fall in sterling is helping to bolster export orders. But the pound’s weakness is a double-edged sword, as it benefits exporters but also pushes up costs and prices.
‘Manufacturers will welcome the new Government’s focus on industrial strategy as well as the Chancellor’s recent guarantee over EU funding, which will help to provide certainty for universities and businesses investing in innovation and research and development.
‘The most significant effects of the vote to leave the EU will flow over the medium to long-term. Therefore firms need to see ambitious decisions in the Autumn Statement that will secure the UK’s economic future as changes to trade, regulation and access to skills loom on the horizon.’