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UK manufacturers’ optimism hits a three-year high

24 October, 2013

Optimism among UK manufacturers has risen at the fastest rate since April 2010 as orders and output continued to grow steadily in the three months to October, according to the latest quarterly Industrial Trends Survey from the CBI (Conferderation of British Industry).

The survey of more than 350 manufacturers reveals that total new orders grew for the second consecutive quarter and that output rose for the third consecutive quarter. Total new orders grew at the fastest pace since April 2012, with growth in the volume of domestic orders at its highest rate since April 2011.

Twelve of the 16 sub-sectors covered in ther survey reported a growth in output, with building materials and mechanical engineering enjoying particularly strong expansion.

Rising demand helped to boost sentiment as well as optimism about export prospects for the year ahead, despite new export orders growing only slightly. 

“The manufacturing sector has increasing confidence in the UK’s recovery, with optimism about the general business situation improving to the greatest extent since April 2010,” reports the CBI’s director of economics, Stephen Gifford. “New orders and output are continuing to grow steadily and expectations for the next three months are promising.

Confidence among UK manufacturers is rising faster than among their European rivals (source: CBI)

“But there are only limited signs of rebalancing towards exports or investment,” he adds, “with marginal growth in export orders and firms scaling back plans for capital expenditure on plant and machinery.”

The investment intentions of manufacturing firms continued to present a mixed picture. Plans for spending on plant and machinery for the year ahead fell back for the third-consecutive quarter, and are now in line with the long-run average.

However, investment intentions for “intangibles” such as product innovation were the strongest for 18 months, and plans for spending on training and retraining were the strongest since October 1997.

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