CBI: UK exports continue on recovery track

London – Overseas demand for UK-made goods is continuing to recover with export order books the least depressed since August 2008, though overall demand remains weak, according to the CBI’s monthly Industrial Trends Survey in March. Of the 499 manufacturers that responded, 22% said export orders were above normal and 40% said they were below normal.

The resulting -18% balance – the difference between the percentage of manufacturers reporting an increase and those reporting a decrease – 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. Stock adequacy is the lowest since June 2007 (a balance of +5%) and below the survey average.

UK exports orders are steadily improving as global demand is starting to recover, though domestic demand remains very weak, according to Ian McCafferty, CBI chief economic adviser, who expects 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,” said McCafferty. “This reflects rising energy prices and increased import costs following Sterling’s decline, as manufacturers try to preserve their battered profit margins.”