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Manufacturing confidence rises but beware eurozone and strong pound

BRITAIN'S manufacturing recovery has "rebuilt some steam" after latest figures from the CBI showed significant growth in order books in the three months to August.

But the business group also said output growth had slowed and warned that a stagnant eurozone and strong pound could hit exports.

The CBI's Industrial Trends survey of 414 manufacturers found 29 per cent reported order books above normal and 18 per cent said they were below, giving a balance of plus 11 per cent, in the three months to August.

This was up from two per cent last month and equalled the level recorded in June. It was last better in December.

Export orders still struggled, with a balance of minus three per cent, though this was an improvement on minus 16 per cent the previous month. Output volume growth showed a balance of plus 12 per cent, down from plus 23 per cent in July.

The outlook of firms remained upbeat with a balance of plus 31 per cent saying they expected output to improve over the next three months, up from plus 26 per cent a month ago.

CBI deputy director-general Katja Hall said: "The outlook for UK manufacturers remains healthy, with both total and export orders firming up. Despite a dip in the pace of output growth, companies expect a strong pick-up in the next three months.

"But with growth flat at best in the eurozone and sterling having risen in recent months, there are still some headwinds to export demand.

"We need more manufacturers exporting to high-growth markets, which will help to put the recovery on to a more balanced, sustainable footing."

The sector remains well behind its pre-recession peak in 2008.

Capital Economics ­assistant economist Paul Hollingsworth said: "The survey indicated that the recovery in the manufacturing sector has re-built some steam in its boiler room for the third quarter."

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