CBI reports manufacturing boost

The latest quarterly CBI survey has been released, with manufacturing providing a bright spot for industry.

According to CBI’s latest Industrial Trends Survey, manufacturing has picked up to its strongest pace this year, sparking an optimistic outlook for the remaining months.

In the survey of 357 manufacturers, many reported a growth in new orders – particularly in the domestic market, which is offsetting a slight slowdown in new export orders. The growth has prompted a lift in industry outlook, with general business conditions stable over the second quarter. However, optimism towards export prospects has stalled.

Survey respondents reported growth in output and total orders are expected to slow moderately in the three months to October.

Manufacturers’ investment intentions were subdued despite signs that capacity pressures were rising again last quarter. The proportion of firms working below capacity fell close to the record-low seen at the turn of the year.

Respondents reported major worries over a lack of skilled labour, which is likely to constraint activity.

Rain Newton-Smith, CBI Chief Economist, said: “The pick-up in output growth is good news and with new orders still running at a healthy rate, the near-term outlook for manufacturers remains reasonably bright.

“Yet manufacturers are still in wait-and-see mode when it comes to their investment plans. Skills shortages are increasing and making it hard for businesses to invest in capital projects, particularly with on-going uncertainty around the direction of Brexit talks. The retrenchment of training budgets is worrying at a time when skills shortages are increasing, and it underlines the urgent need to pick up the pace on apprenticeship levy reform.”

Tom Crotty, Group Director of Ineos and Chair of CBI Manufacturing Council, said: “It’s great to see the manufacturing sector firing on all cylinders, with production revving up again after the slowdown earlier this year.

“But rising trade tensions and ongoing uncertainty over our future trade and customs arrangements are clearly taking their toll on manufacturers’ confidence and investment.”