Manufacturing activity and the outlook in the sector improved in August, according to the latest industrial trends survey from the Confederation of British Industry (CBI).
It says that pricing pressures have eased since the first half of the year leading to an index result of +1%. This reveals that order books in the sector are healthy and expectations for output growth are above the long-term average of -18% and last month’s balance of -10%.
29 per cent of the 510 manufacturing firms surveyed said that total orders were above normal, whilst 29 per cent said they were below normal. Similarly, 24 per cent of companies said export order books were above normal and the same amount said they were below normal. Once again, the balance of this index is 0%, an improvement on -8% in July and the long-term average of -21%.
Overall, UK manufacturing firms believe that factory output is set to improve with an index rating of +13%. Fewer companies believe they will need to raise prices, with 19 per cent expecting to raise output prices and ten per cent expecting to lower prices. The resulting index of +9% is considerably lower than similar ratings in earlier months of 2011.
Richard Woolhouse, CBI Head of Fiscal Policy, said: “Manufacturing order books are holding up, and expectations for output growth are above their historical average, although they are less strong than earlier this year.
“Inflationary pressures have eased since the start of the year, with fewer firms predicting they will have to raise prices at the factory gate over the coming quarter.”
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