UK: Goods with strong domestic and export performance

Markets UK: Goods with strong domestic and export performance

01.06.2017 | Editor: Briggette Jaya

According to the latest quarterly CBI Industrial Trends Survey, manufacturers in the UK have reported strong growth in orders both at home and from abroad for the first quarter of 2017, although costs and prices have also continued to rise at an elevated pace.

“Exports have surged and firms are at their most optimistic about selling overseas in over four decades. Even so, the combination of the weak pound and recovering commodity prices means that cost pressures continue to build, and manufacturers report no sign of them abating over the near-term,” Rain Newton-Smith, CBI chief economist said.
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The survey of 397 manufacturers found that domestic orders had improved at the fastest pace since July 2014 in this period. Export orders also recorded the strongest growth in six years, supported by strong rises in competitiveness, particularly in non-EU markets. The weak pound continued to push up costs, with manufacturers reporting the strongest rises in unit costs in six years.

Output growth firmed to a three-year high and is expected to accelerate over the next quarter. Manufacturers’ anticipate that new orders will grow more moderately over the near-term, owing to a predicted slowdown in domestic demand outweighing export orders growth. Expectations for the latter are at their strongest in over two decades. Companies are also upbeat in their year-ahead expectations for exports, with optimism posting the biggest gain in over four decades, contrasting with their assessment about the overall business situation which was unchanged.

There was a softening in investment plans across the board, particularly those for buildings and plant & machinery, with the latter at its most negative for nearly six years. When queried about potential limits on capital spending over the next year, the proportion of firms citing inadequate net returns climbed to the highest in a decade. Headcount saw decent growth, but hiring intentions for the next three months are muted.

Uncertainty remains the biggest problem with Brexit.

This article was first published on ETMM online.

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