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'Growth in new orders but exports will fall' - CBI

British manufacturers experienced continued new order growth in the three months to January but companies now expect export orders to fall in the coming quarter, according to the latest research.

The CBI Quarterly Industrial Trends Survey of 467 companies reports that the rise in the volume of total new orders during the period was led by strong demand at home and very modest growth in export orders.

Manufacturing output rose at a similar pace to the previous quarter and it was notable that costs and prices fell, with unit costs edging down for the first time in more than 12 years.

Workforces in the sector also continued to grow "at a solid pace".

Manufacturers' plans for investment in plant and machinery have strengthened, while plans for spending on product and process innovation, and training and retraining, "remain robust".

Despite this, companies are anticipating next quarter's export orders to be flat which will act as a drag on total orders growth.

Access to skilled labour and capacity constraints are key factors cited as likely to limit output in the next quarter, and "significantly more" respondents expect price competition to limit export orders.

Rain Newton-Smith, CBI director of economics, said British manufacturers are "still heading along the right path".

"Exports have grown modestly, but there is a feeling that we will not see a repeat in the next quarter, especially with the Eurozone still treading water and battling deflation," added Newton-Smith.

"Falling oil prices should be positive for the UK economy overall, benefitting households and lowering costs for firms, although North Sea oil producers are being hit.

"With overall cost pressures contained as a result, it’s no surprise to see average domestic prices in the manufacturing sector falling at the fastest rate for five years."

 

Source: Insider Media

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