The UK Quarterly Industrial Trends Survey showed the largest quarterly rise in total orders in almost three years, and the fastest growth in output volumes since 1995. Business investment plans remained downcast, however, while companies continued to eliminate jobs over that last quarter and will continue to do so in the coming months.The Confederation of British Industry (CBI) also noted an increase in domestic output prices.Responding to the survey, 25 percent of firms said average domestic prices have gone up in the last three months, while nine percent said they have decreased, giving a rounded balance of 15 percent, the highest since July 1995.
Domestic price increases were mainly focused on consumer and intermediate goods like timber, chemicals and man-made fibers, while capital goods prices remained stable.
The volume for total new orders over the last quarter rose for a balance of 10 percent, marking the highest increase since April of 2004. This increase is expected to continue in the coming quarter, with the survey noting the highest level of expectation since October 1997.
A balance of 18 percent reported an employment reduction, with job losses continuing to take a downturn in the coming months; 29 percent of respondents plan to reduce employment. Based on the survey results, the CBI estimates that total employment in the sector will drop below three million for the first time since manufacturing employment data was tracked starting in 1978.
|Average Domestic Prices.|
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Source: Confederation of British Industry
“Having seen margins consistently squeezed by rising input costs and an inability to increase selling prices in a tough marketplace, manufacturers found room to correct this over the last three months,” Ian McCafferty, CBI Chief Economist, said. “While these survey results are further evidence of the short-term inflationary pressures in the economy, they are not the whole story.”