The latest
survey by the Confederation of British Industry (CBI) revealed on Tuesday the
UK manufacturers' order books improved in March.
According to
the report, the CBI's monthly factory order book balance increased to -5 in March
from -24 in the previous month, surpassing their long-run average of -14. This
was the highest reading since April 2019. Economists had forecast the reading
to come in at -20. Meanwhile, export order books (-20) strengthened on February
(-39), approaching to their long-run average (-18).
The CBI also
reported that output volumes in the three months to March were broadly flat (+3
from -8 in February), which marked their highest balance since May 2019. It was
also expected that output would pick up rapidly in the next three months (+30),
marking the strongest expectations since August 2017.
In other survey
results, output prices were seen to accelerate in the next three months (+20
from +3in February), marking the strongest expectations for price growth since
February 2019).
“It’s great to
see the mood lift among manufacturers, buoyed by a jump in order books”, noted Anna
Leach, CBI Deputy Chief Economist. But firms continue to grapple with higher
freight costs as well as raw material shortages. “Consequently, manufacturers
anticipate prices to grow at a quick pace next quarter. Meanwhile, risks to
growth in European markets are elevated given the slow pace of vaccine roll-out
and the likelihood of further lockdowns.”
Meanwhile, Tom
Crotty, Group Director at INEOS and Chair of the CBI Manufacturing Council,
said: “The improvement in order books, and the more positive outlook for
output, is a welcome boost for the sector following a difficult start to 2021. Nevertheless,
there can be no doubt that this progress is fragile and the sector continues to
operate in a challenging landscape. Container shortages and higher freight
costs are causing issues with supply chains and many firms are also
encountering unanticipated difficulties with the new post-Brexit trading
arrangements. It’s therefore important for the government continues to support
the sector through the coming critical weeks and months ahead.”
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