Demand for UK manufactured goods has returned to the 12-year high reported in March, but expectations of price inflation have eased back, the CBI said today (Thursday).
In its June Industrial Trends Survey, 29 per cent of manufacturers reported that total orders were above normal, while 22 per cent said they were below.
The rounded balance of +8 per cent is an improvement on the past two months and repeats March's 12-year peak (+8%). The strengthening in demand was helped by an improvement in export orders, which returned to a normal level (0%).
Demand for consumer goods - like electricals and food - was particularly strong, with the order books balance at +10 per cent. And a balance of +4 per cent of firms said order books were above normal for intermediate goods like machinery and tools.
A balance of +16 per cent of firms expects to raise prices over the next three months, showing that pricing pressures persist, but have eased from May's 12-year high (+25%).
The buoyant demand being enjoyed by the manufacturing sector is reflected in perceptions of stock levels. While 79% of firms report stock levels as at least adequate to meet demand, the balance between those reporting stocks as more than adequate against those reporting less than adequate is -2%, the lowest since May 1988 (-3%).
Output growth expectations are at their strongest since February, with a balance of +25 per cent of firms saying output will increase over the next three months.
Ian McCafferty, CBI Chief Economic Adviser, said: "The manufacturing sector is motoring along with solid order books and strong expectations of output growth.
"Pricing pressures from manufacturers have reduced however, so while there is still a likelihood of interest rates going up, inflation concerns stemming from the sector should start to ease."
1. A balance is the difference between the percentage of manufacturers reporting an increase and those reporting a decrease.
2. The survey was conducted between 24th May and 13th June. 620 manufacturers responded.
3. The total order book balance of +8% is the same as it was in March 2007, which was the highest since May 1995 (+10%).
4. 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. The organisation is also the UK's official business representative in the European Union, which generates more than 50 per cent of regulation affecting British firms. With offices across the UK as well as in London, Brussels, Washington and Beijing, the CBI coordinates British business representation around the world.