Industrial output to 'pick up sharply' over next three months: CBI
22 March 2013
Manufacturers expect output to accelerate sharply in the next three months, according to the CBI’s latest monthly Industrial Trends Survey.
Stephen Gifford
The survey of 398 firms found that output growth over the last three months remained steady but subdued. But the outlook is much brighter for the next quarter, with output volumes expected to rise rapidly - the strongest expectations since April last year – with the anticipated pick-up in particularly marked in the food, drink & tobacco and mechanical engineering sectors.
Exports orders are also at their highest level for three months, while total orders are broadly flat. Meanwhile expected price inflation has fallen back to levels last seen midway through last year.
Stephen Gifford (pictured), CBI director of economics, said: “Manufacturers appear more optimistic about the next few months than the official figures and commentary would suggest, with sharp rises in output expected right across the sector.
“Total orders were steady and in line with long-run averages and there was some pickup in exports, possibly helped by the weak pound. Price expectations have fallen to the lowest level for six months – driven by inflation expectations plummeting from near-record highs in the food, drink and tobacco sector.”
Key findings of he survey, which was conducted between February 21 and March 13, are:
- 15 percent of firms reported order books above normal (excluding seasonal variations), and 30 percent below, giving an overall balance of -15 percent. It remains in line with long-term average of -17 percent and in line with reported orders in February (-14 percent).
- 19 percent of firms reported export order books above normal, 30 percent below, giving an overall balance of -11 percent, the highest level for three months (-11 percent in December) and well above the long-term average of -21 percent.
- Output growth over the last three months was steady, with 28 percent of firms reporting volumes up and 25 percent down, to give an overall balance of +3 percent which is in line with expectations at the end of last year. There was strong growth in the three largest sectors - Food, Drink & Tobacco, Chemicals and Motor Vehicles & Transport Environment - but this was offset by falls in other sectors.
- Output is expected to rise sharply over the next three months. Some 35 percent of firms predict increases and only 13 percent expect falls – an overall balance of +22 percent, the highest since April last year. The anticipated acceleration is broad-based, but driven primarily by the Food, Drink & Tobacco sector and Mechanical Engineering sector (which has reported flat or declining output for nine of the last ten months).
- Average prices over the next three months are expected to fall back with 14 percent of firms reporting prices rising, and 9 percent predicting drops. The overall balance of +5 percent is the lowest for six months and a big drop from +21 percent in January and +20 percent in February. This was driven almost entirely by inflation expectations in the Food, Drink & Tobacco sector falling from +59 percent to +2 percent.
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