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Manufacturers report healthiest orders for three years

01 May, 2004

Manufacturers report healthiest orders for three years

UK manufacturing order books are now at their healthiest level for more than three years, with both domestic and export orders improving sharply.

The CBI`s latest monthly industrial trends survey shows the fledgling manufacturing recovery living up to firms` confident expectations, with demand and output picking up despite the growing strength of sterling.

Of the 803 manufacturers who responded to the survey, 21% reported that total orders were above normal, and 29% said they were below. The balance of -8% compares with -15% in the previous survey, and is the strongest result since December 2000.

Some 20% of the respondents said export orders were above normal, while 27% said they were below. The balance of -7% compares with -22% in February and is the least negative result since November 1996.

The strength of sterling has not, as yet, had a noticeable impact on export order volumes, the CBI reports, but domestic prices are coming under pressure as competition from cheaper imports increases.

Output expectations remain strong and the positive trend for 2004 compares well with last year`s results. Stock levels are lean, providing support for further acceleration in output over the coming months.

"The manufacturing recovery is gaining strength, with demand improving domestically and globally," says the CBI`s chief economic advisor, Ian McCafferty. "The value of sterling has yet to have an impact on export orders, though manufacturers will be concerned if the pound strengthens further. Competition from cheaper imports has however renewed the downward pressure on domestic output prices."

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