Manufacturing orders remained close to a three-decade high in the final quarter of 2017, helped by the weakness of the pound, according to the latest CBI survey of the sector.
Around 28 per cent of firms reported orders above normal and 11 per cent below, giving a positive overall balance of 17 per cent, the joint highest (alongside the results of last month’s Industrial Trends survey) since August 1988.
Export order books were at their strongest since the mid 1990s, with a positive reported balance of 16 per cent.
Motor vehicles and mechanical engineering reported especially strong orders, although there was an above normal reading in 14 out of 17 sub sectors.
However, respondents expected output growth to moderate in early 2018 and for selling prices to increase.
The survey also pointed to weak investment intentions among manufacturers, in an atmosphere of uncertainty over future post-Brexit trade arrangements.
The trade-weighted value of sterling remains down around 10 per cent since the 23 June referendum, making UK manufactures automatically more competitive in overseas markets.
Joint highest since 1988
“While the lower level of sterling continues to support exporters, cost pressures remain intense. Businesses will expect to see the Government’s Industrial Strategy make rapid progress next year to support manufacturing and the wider economy in every corner of the UK,” said Anna Leach, the CBI’s head of economic intelligence.
“While domestic demand for manufactured goods has recently been healthy, weakened consumer purchasing power and business caution over investment amid economic, political and Brexit uncertainties are a challenging combination for manufacturers,” said Howard Archer of the EY Item Club.
According to the Office for National statistics, manufacturing, which accounts for around 10 per cent of UK GDP, expanded by 1.1 per cent in the third quarter of 2017.
Over that period the overall economy is estimated to have grown by 0.4 per cent.
Despite the resilience of manufacturing, the UK economy is projected to put in its worst growth performance over 2017 since 2012, with an expansion of just 1.5 per cent, at the same time as our peer economies in Europe and the US are picking up speed.
The CBI’s Industrial Trends Survey was conducted between 22 November and 12 December and covered 371 firms.