February 22, 2007 | posted by Michael Baxter in IABN |

Manufacturers seem to have reason to celebrate. Orders books are brimming over. At least levels have hit a 12 year high, or so says the CBI in its latest Industrial Trends survey.
Actually when you examine the figures, it’s not quite so spectacular. The CBI index is drawn up by asking manufacturers how order books compare with 12 months ago. Some say they are better, others worse, and the balance forms the index. So if the index is below negative, it means most are saying levels are down on last year; if is positive, most are saying they are better.
And for February, the index hit plus 4. That’s the highest level since June 1995.
Not that plus 4 amounts to a runaway success. At that miserly level, an awful lot of manufacturers are still saying things are no better.
Even so, Doug Godden, CBI head of economic analysis, appeared to be beaming, when he said: “This is an upbeat survey continuing the trend of manufacturing recovery that started in early 2006.”
But, as ever with these things, there’s a catch.
Manufacturers have been reacting to the improving climate by upping prices. The CBI index for manufacturers’ average price dwarfs the order book index. In fact the CBI industrial trends price index stands at plus 19.
Paul Dales at Capital Economics said: “This survey provides more evidence that strong demand is supporting firms’ attempts to raise their prices in order to recoup the profits lost during last year’s squeeze on energy prices.”

So while many look forward to falling consumer price inflation in the coming months - thanks to many of the one-off costs that caused recent peaks falling out of the equation - other pressures, with prices charged by our manufacturers in the vanguard, are building.

But while, with February being the exception, the CBI has repeatedly reported on a dismal manufacturing performance over the last few years, (February’s reading was the first time the index had gone positive at all since August 2004), the Chartered Institute of Purchasing Supply has had a much more bullish story to tell.

With the CIPS purchasing managers index, a score of 50 representa expansion in the sector. Back at the beginning of this month, the CIPS index hit 52.8, meaning the index had been 50 or more for the nineteenth consecutive month.

Much of the recent improvements in the manufacturing sector have come from abroad, with a resurgent eurozone acting as a boost to the UK. This is despite the high value of the pound