CBI industrial survey finds strong output growth

CBI industrial survey finds strong output growth

Domestic and overseas demand helped order books to swell to their highest since February 2015, while export orders matched the three-year high seen in March. Export orders also stayed robust, equalling the level seen in March (itself, the highest level seen since December 2013).

Rain Newton-Smith, CBI chief economist, said: "The summer sun has come out early for Britain's manufacturers".

Output growth saw its fastest rise since December 2013.

Manufacturing order books improved on April, and output growth accelerated in the three months to May, according to the CBI's latest Industrial Trends Survey. As a result, firms were expecting to raise their selling prices.

The figures are likely to offer some reassurance that the big fall in the pound after last year's Brexit vote, twinned with a strong global economy, will boost manufacturers at a time when consumers are under pressure from rising inflation.

"On the other side of the coin though, we have mounting cost pressures and expectations for factory-gate price rises are running high", she added.

They are also concerned that sterling could rise, wiping out the benefit for exporters, should the Brexit talks proceed smoothly and the United Kingdom strike a beneficial trade deal with Brussels. "Sustained investment in innovation and education will be vital to shore up the success of British industry".

Samuel Tombs at Pantheon Macroeconomics said the survey showed manufacturers are benefiting from the revival in world trade and sterling's depreciation.

"What's more, the risk that the United Kingdom leaves the European Union without a deep trade deal in place is casting a cloud over the outlook for manufacturing".

Howard Archer, chief United Kingdom and European economist at IHS Markit, said: "This is an encouraging survey that fuels hopes that the United Kingdom economy is on course for some pick-up in growth in the second quarter after gross domestic product expansion more than halved to 0.3% quarter-on-quarter in the first quarter".