Earlier this week we told how British manufacturing has not expanded since 1987. With employers facing competition for staff from the City forcing wages up and reducing the unit cost of output, with the pound high in value and with RD investment lagging behind levels seen in competitor’s economies, it’s perhaps no surprise to see that the latest figures from the CBI show that the number of manufacturers with orders up on last year are still fewer in number than those who have seen a decline.
In fact the CBI Industrial trends survey for order books has been negative now since August 2004, but let’s be grateful for small mercies.
The index might still be negative but throughout most of last year and the first few months of this, it was much worse.
Even more encouragingly, the proportion of manufacturers expecting to increase output over the next three months is the highest since February 2005 - a positive balance of 14 per cent, with 31 per cent expecting an increase and 17 per cent a decrease
CBI Chief Economic Adviser Ian McCafferty said: “The outlook for manufacturing is positive in the short-term, driven by export growth and continued strong performance in the eurozone. Longer-term prospects, however, are more uncertain for the sector. There are some signs of a US slowdown, more volatility in financial markets and profit margins are still under pressure from the relentlessly rising cost base.”
Earlier this month the CIPS new export orders index hit its highest level since January 2004 and the manufacturer’s organization, EEF said output indicators for the sector are now at the highest level for ten years.
With the German economy gradually moving up from 1st gear, and with a Eurozone recovery of sorts occuring, there are clearly signs that manufacturing is improving. But then again, as as we said above, output is no greater today than nine years ago, so when EEF hail the best figures in ten years, just remember to put that in perspective
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