Manufacturing demand in UK 'weakens slightly'

Paul Boughton
Overall demand for UK manufactured goods weakened a little in June, after a significant improvement in May, but total order book levels are still close to their long-term average, the Confederation of British Industry (CBI) said today.
Responding to the latest CBI monthly Industrial Trends Survey, 19 per cent of manufacturers said that total orders were above normal, while 42 per cent said they were below. The resulting balance of -23 per cent is down slightly on the figure in May (-18 per cent), but does not reverse the improving trend of recent months, and the balance is still quite close to the long-term average (-18 per cent).
Export order books were also a little weaker compared with last month. Nevertheless, the balance of -2 per cent shows that export orders are still considered to be broadly normal. This follows last month’s positive survey balance (+3 per cent), the first since March 2008 (+3 per cent), which was a considerable improvement on April this year (-16 per cent).
Manufacturers still expect to raise output firmly during the next three months, with a net 15 per cent expecting production to rise. This is broadly unchanged on May’s balance of +17 per cent, and is well above the long-term average of +5 per cent.
Inflationary pressures remain, but have eased a little, with a balance of 9% of firms expecting prices will go up, slightly lower than in the past three months. Makers of consumer goods no longer expect domestic prices to rise, while manufacturers of capital goods – such as plant & heavy machinery – continue to predict no change.
Ian McCafferty, CBI Chief Economic Adviser, said: "Although demand for UK-made goods has weakened a little this month, the manufacturing sector remains on a path of recovery, with conditions much improved on just a few months ago. UK exports continue to be boosted by the weak pound and strengthening world trade, firms still expect a healthy rise in production in the coming months and inflationary pressures look to be easing a little."
Stock adequacy was similar for the third month running. A net 11 per cent of firms reported that stocks are more than adequate to meet demand, which remains below the survey's long-run average.

The CBI is the UK's leading business organisation, speaking for some 240,000 businesses that together employ around a third of the private sector workforce. With offices across the UK as well as representation in Brussels, Washington, Beijing and Delhi the CBI communicates the British business voice around the world.

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