UK manufacturing output increases, CBI Industrial Trends survey finds

UK manufacturing output continued to grow at a "solid" rate in recent weeks, according to the CBI's monthly industrial trends survey that also indicated the sector's confidence had bounced back strongly since the Brexit vote.

The headline total orders balance remained at -5 in September, the CBI calculated from its survey of 481 industrial firms, well above the long-run average of -20.

Forward-looking output expectations improved too, with the balance up to +22 in September from +11 in August, with more than half of manufacturers expecting the rate of production to accelerate rapidly.

Order books remained unchanged from the previous month, well above average levels.

Economists said that on the basis of historical trends, suggested positive quarterly growth in manufacturing output of about 0.5% in the third quarter.

Export orders weakened slightly to a balance of -10 in September, down from the two-year high of -6 in August but still well above June’s reading of -22 and the long-run average of -20.

CBI chief economist Rain Newton-Smith highlighted that order books remaining particularly solid amongst the food, drink and motor vehicles sectors, with the research finding the fall in sterling has boosted international competitiveness for many businesses.

“But there are plenty of challenges ahead for manufacturers as we adjust to a new relationship with the EU and the rest of the world," she said. "That’s why we want to see a focus on promoting investment and innovation in the Autumn Statement to ensure our makers are able to put their best foot forward and adjust to new opportunities.”

Ruth Gregory, UK economist at Capital Economics said: "All in all, then, this latest survey adds to the evidence that the overall economy is set for a period of slower growth, rather than a full-blown recession. All eyes will now be on the performance of the dominant service sector in the third quarter, for which the first post-referendum figures will be published on 30th September."