Optimism among manufacturers highest in 40 years
Business optimism among manufacturers saw its sharpest improvement since 1973, on the back of strong growth in orders at home and abroad. 41% were more positive than three months ago and 8% less, giving a balance of 33%, a CBI survey, including food and drink manufacturers, revealed.
CBI figures report a balance between manufacturers who agreed and those that disagreed.
Katja Hall, CBI chief policy director, said: “Confidence is rapidly rising among British manufacturers, with a real sense of business optimism. Our industrial base is seizing a bigger role in the UK’s economic recovery, with output, orders and hiring all on the up.”
The survey of 405 manufacturers also found that in the three months to April 2014, a balance of 21% of firms recorded a growth in total order books – the highest since 1995. The balance for new domestic orders was 17%, with 16% recording growth in exports.
There was also good news for the job market, with numbers employed rising at the strongest rate since October 2011(18%).
Continued recovery
Signs of a continued recovery in the manufacturing sector appeared to be feeding through to investment plans over the next 12 months, with plans for capital expenditure on plant and machinery the highest for 17 years, the survey claimed.
Hall said investment plans for innovation and training and retraining also remained robust.
“There are still bumps in the road ahead, with only a tepid recovery likely in the Eurozone, the pound creeping higher and a rapidly evolving situation in Ukraine,” she said. “However, expectations for growth in the coming three months are positive and manufacturers plan to significantly ramp up investment in the year ahead.”
Manufacturers’ investment intentions for the year ahead improved for plant and machinery, compared with the previous 12 months, with 16% planning to invest up from 4%. They also remained robust for product and process innovation, with 27% eyeing up investment in that area and 26% planning to spend on training.
A balance of 16% expected employment to increase.
Highest since 1996
Looking ahead to the next quarter, a balance of 26% of manufacturers said they expected total new orders to increase – the highest since 1996.
A balance of 26% expected new domestic orders to rise, 34% expected an increase and 8% a fall – the highest since April 1977.
Of those surveyed, a balance of 29% expected new export orders.
A rise in domestic output prices was expected by 9%, alongside another rise in unit costs anticipated by a balance of 10% of respondents. Almost half (41%) of firms anticipated a rise in output volumes and 10% a fall, giving a rounded balance of 32%.
