Growth in manufacturing output highest since 1995
CBI survey finds exports received particular boost
The UK manufacturing sector is in a state of rude health, with both the size of total order books and the volume of output the highest in 18 years, according to a new survey.
A study of 345 UK manufacturing firms conducted by business organisation CBI found that 36% of firms reported their orders were above normal in November compared to 25% who said they were below; the highest ratio since March 1995.
The volume of manufacturing output also rose by 29% in the three months leading up to November, the fastest rate since January 1995.
Manufacturing exports received a particular boost, with manufacturers recording a 1% net increase in orders – well above the long-term trend of -20%.
Business owners in the sector expressed optimism for the future in the survey; 44% expected to raise output in the next three months, compared to 20% of those who expected their output to contract.
The sector’s growth seems to have been driven by an increase in small and medium-sized firms exploiting the opportunities created by the declining number of large manufacturers; ONS UK business survey data showed a 3% rise in small manufacturing firms since 2011 compared with a 0.4% decline in large producers.
Stephen Gifford, CBI Director of Economics, commented on the study: “This new evidence shows encouraging signs of a broadening and deepening recovery in the manufacturing sector.
“Manufacturers finally seem to be feeling the benefit of growing confidence and spending within the UK and globally.
“But challenges remain. UK exporters need government support to break into high-growth export markets to reduce their vulnerability to any further Eurozone flare-ups.”
The findings were also welcomed by the National Association of Commercial Finance Brokers (NACFB), who said the survey showed the ‘vital role’ small firms are playing in the recovery of the sector. Marcus Grimshaw, chairman of the NACFB, said: “It’s an impressive achievement by small business leaders considering the background of uncertainty in money markets. According to the Bank of England’s credit conditions survey, lenders feel access to finance is improving for small businesses. But the fact remains that for most of the last two years the net value of conventional SME loans has consistently fallen.
“The changing flavour of the business finance market means that employers have an increasing range of options to support their growth. The use of finance leasing or asset purchasing by SMEs to gain access to vehicles, machines or equipment has shot up by 125% in the last two years, with peer-to-peer lending and other new forms of small business finance also up by 68%.”