Flat expectations
16 Jan 2013
Despite an increase in total order books for the third month running, UK manufacturers remain cautious about prospects for output at the start of the new year, according to the CBI’s final Industrial Trends Survey of the year.
Of the 392 manufacturers responding to the monthly survey, 18% reported total order books above normal and 30% that they were below.
The feedback suggested that while the previous month’s rebound had held, there was little further improvement in export order books. Looking ahead, manufacturers expect output to be flat for the next three months.
Half of the twelve main manufacturing sub-sectors expect output to fall, including chemicals and electrical engineering.
Expectations of output price inflation are rising, with all but two of the 11 manufacturing sectors predicting an increase. The food, drink & tobacco sector is the largest driver of the increased inflation expectations by some distance, the CBI noted.
Manufacturers remain hesitant in predicting further output growth and are keeping stock levels low,” said Anna Leach, CBI head of economic analysis. “Conditions in the sector and the wider economy are likely to remain fragile until global conditions improve over the course of 2013.”
Likewise, manufacturers organisation the EEF reported expectations of some pick up in the UK economy but forecast that industrial activity to look much as it did in 2012.
The big risks on the horizon come from outside the UK, according to the EEF’s annual executive summary.
On a brighter note, the organisation concluded: “Manufacturers still see potential opportunities that will drive growth in their own businesses.
Their focus on innovation over the past few years is expected to pay some dividends as new product development will help lift sales.
Emerging markets are also anticipated to support growth as will the possibility of diversifying their customer base and selling goods and services into new supply chains.”
