Overseas demand for UK-made goods is continuing to recover with export order books the least depressed since August 2008, according to a CBI survey. But the business group warned that overall demand remains weak.
Of the 499 manufacturers responding to the CBI’s monthly Industrial Trends Survey in March, 22% said export orders were above normal and 40% said they were below normal. The resulting balance of -18% is an improvement on the previous month’s figure of -23%, and the highest since August 2008 (-9%).
Total order books remain depressed, reflecting the continued weakness of domestic demand. 14% of manufacturers said they were above normal, while 51% said they were below normal. The resulting balance of -37% is broadly unchanged from the previous two months.
With total orders still fragile, firms anticipate only a modest rise in production in the next three months. 25% said they expected output to rise in the next quarter, and 20% anticipate a fall, giving a balance of +5%. That compares with +7% in February.
Price expectations are the highest since September 2008. The balance of 17% for March compares to 8% in January and February.
Ian McCafferty, CBI Chief Economic Adviser, said:
“Our survey shows that UK exports orders are steadily improving as global demand is starting to recover.
“Home-grown demand remains very weak, however, and as a result we can expect manufacturing output to grow only modestly for some time.
“Producer price inflation is expected to pick up further in coming months, to the fastest rate since autumn 2008. This reflects rising energy prices and increased import costs following Sterling’s decline, as manufacturers try to preserve their battered profit margins.
Stock adequacy is the lowest since June 2007 (a balance of +5%) and below the survey average.