FEBRUARY 2017
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Electric Linear Actuators Small Flat Belt Conveyors
Brakes Plastic Extrusions
Enclosures for Harsh Environments Hinges
Levelling Feet Handles Handwheels & Knobs
Linear Motion & Control Connectors
Machine Safety Metal Seals Fastening & Adhesives Seals for Extreme Environments
Geared Motors Springs Rail
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www.rutlandplastics.co.uk Innovation
in Injection Moulding
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OPTIMISM AMONG MANUFACTURERS RISES AT FASTEST PACE IN TWO YEARS
According to the latest quarterly CBI Industrial Trends Survey, UK manufacturers are more optimistic about their business situation and exporting prospects, reporting strong growth in domestic orders over the last quarter. The survey of 461 manufacturers reveals that, in the three months leading up to January, the volume of domestic orders rose at the fastest pace since July 2014. Export orders also continued to grow, but below expectations. Headcount edged higher, having dipped for the first time in more than six years in the previous quarter. Demand is expected to grow strongly over the next three months, driven by both domestic and export orders, while production is also expected to advance briskly. Expectations for output growth are also the highest since July 2014. Concerns persist over access to skilled labour, however, with almost a quarter of respondents – the highest since July 1989 – observing that skilled labour availability could limit output over the next few months. Sterling’s depreciation continues to impact prices as unit costs rose at
their highest pace in over five years, amid expectations that this will intensify over the next quarter. However, manufacturers continue to see the competitive benefits arising from sterling’s weakness, reporting a further strong rise in competitiveness within the EU, and putting the rise in competitiveness in non-EU markets at a survey high. The pick-up in output has meanwhile eaten into spare capacity, pushing the proportion of firms citing capacity expansion as an investment driver, to a survey high. Firms are planning to increase investment in product and process innovation, and training and retraining, over the year ahead at the fastest pace in two years. Meanwhile investment plans for building, and plant and machinery, have moved above their long-running averages. Rain Newton-Smith, CBI chief economist, said: “The weaker Pound is driving export optimism for the year ahead, but is having a detrimental impact on costs for firms and ultimately for consumers. “The new Industrial Strategy can support our manufacturing base by offering a shared long-term vision for the key sectors and regions of the economy, and evidence-based plans for government and business collaboration. The CBI, and its members across the country, stand ready to support the Government in achieving this.” Here are the key findings for the past quarter: Domestic orders rose at
their fastest pace (+16 per cent) since July 2014. Export orders rose more moderately (+5 per cent), and below the expected +17 per cent. An increase in total orders was reported by 37 per cent of businesses and 21 per cent reported a decrease, giving a balance of +16 per cent. According to 32 per cent of firms, the volume of output over the past three months was up, and 18 per cent said it was down, giving a balance of +15 per cent. According to 22 per cent of manufacturers, employment numbers were up, and 18 per cent said they were down, giving a balance of +4 per cent. Despite the uncertainty created by Brexit, 27 per cent of firms said they
were more optimistic about the general business situation than three months ago, and 12 per cent were less optimistic, giving a rounded balance of +15 per cent – the highest since January 2015. Optimism about export prospects for the year ahead rose strongly (+19 per cent). Firms competitiveness in the EU also rose strongly (+28 per cent), while their competitiveness in non-EU markets rose at the fastest pace in the survey’s history (+26 per cent). Average domestic prices continued to grow at an above average pace (+9 per cent vs -3 per cent) for the third quarter in a row, while average export prices rose strongly (+16 per cent vs LR average of -9 per cent). The proportion of firms working below capacity (46 per cent) was at its lowest since April 2015. Manufacturers intend to increase spending on product and process
innovation strongly over the year (+27 per cent) and at a higher rate than in the previous quarter. Spending on training and retraining also continued to grow robustly (+27 per cent). The number of firms citing access to skilled labour, as a factor likely to limit output, was at its highest since July 1989 (24 per cent). Here are the key findings for the next quarter: Total new orders are expected to grow strongly (+18 per cent), as are domestic orders, though at a slightly slower pace. A balance of +17 per cent predict that export orders will rise, and expectations for output growth are the strongest since July 2014 (+26 per cent). Average domestic prices, export prices and unit costs are all expected to rise at their strongest rates since April 2011.
www.cbi.org.uk
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