Manufacturing orders rise despite fall in exports

The weak pound starts to make its mark, and prices are expected to rise, CBI finds

Orders for products manufactured in the UK increased in November, but exports orders dipped slightly as the effect of the low pound fails to stimulate consistent overseas demand, according to latest CBI statistics.

The CBI’s monthly survey of 430 manufacturers showed the balance of total orders improved to -3 in November from -17 in October, well above the long run average of -20.

Of the manufacturers surveyed, 23% said their total orders were above normal and 26% said they were below normal, leading to a balance that was better than the forecast of -8%.

Output also rose at a slower pace over the past three months, with the volume output balance at 4%.

The survey showed that the export order book balance was -11%, worse than the previous month's figure of -6%, but still above the average of -19%.

Although sterling’s sharp drop has not fed through to a consistent export surge, the input effect of higher costs means manufacturers are planning to increase average selling prices at the fastest pace since January 2015 over the next three months.

Average selling prices are expected to rise to 19% – their fastest pace since January 2014.

The survey found that expectations for production over the coming quarter have reached their highest level since February 2015 at 24%, as 38% predicted growth versus the 15% who predict a decline.

Rain Newton-Smith, CBI chief economist, said: “It’s good to see manufacturers’ overall order books at healthy levels, and the outlook for output growth remaining robust as we head into Christmas.

“But the weak pound is beginning to make its mark, and prices are expected to rise, especially in the food and drink sector. On the flip side though, export orders remain above average.”

Newton-Smith added: “To bolster British industry, manufacturers want to see bold decisions in the Autumn Statement. A crystal clear focus is needed on infrastructure, investment and innovation from the chancellor, so that firms are given the very best environment in which to grow, both at home and abroad.”