Manufacturers expect expansion says CBI

Britain’s manufacturers predict an increase in output over the next quarter – albeit a fairly modest one, according to a Confederation of British Industry poll.

Of the 425 manufacturing firms quizzed in the its latest monthly Industrial Trends Survey, 28 per cent said they expected to increase production volumes over the next three months with 21 percent believing it would decrease.

The September survey shows a slight increase in optimism over August with 19 per cent of businesses saying order books were above normal but 28 per cent reporting below average levels. Export orders improved from their long run average of -21 per cent to -10 per cent. Companies also disclosed that stock levels are at their highest point for almost a year.

 “Domestic and overseas demand have improved in this survey following last month’s falls, providing a foundation for somewhat better output growth expectations,” said Anna Leach, the CBI’s head of economic analysis.

 “Manufacturers believe that there will be a modest rise in output over the coming months, driven largely by the chemicals and food and drink sectors.

“But uncertainty is expected to build through the autumn – with key decisions to be made in the Eurozone and the approach of the US fiscal cliff – meaning that conditions are likely to remain difficult for UK manufacturers.”

'Single minded' plan needed for growth

“Clarity and single-mindedness” on the part of the government are the key ingredients for kick-starting and re-balancing the economy, according to Britain’s leading manufacturing organisation.

The EEF, which has been promoting the idea of a new economic model based on trade and investment rather than consumption and borrowing, believes there has been little progress towards this.

The organisation stresses that a better balanced economy is only achievable if the government adopts the same clarity and single-mindedness on growth that it has done on trimming the deficit.

“To do this, we are urging the government to adopt a new approach,” said an EEF spokesman. “We need a clearer plan for the future of the economy and a long-term industrial strategy to deliver it. This must become the definitive statement of the government's economic intentions and the guiding principle for every policy and spending decision from now to the election and preferably beyond

“Every business knows that you need to cut costs in tough times, but you also need a strategy to move forward. And that's what we need from government – a cross-economy industrial strategy, which sets out the route it will take to achieving a better-balanced economy.

“This shouldn't be about supporting manufacturing alone, what we need is an industrial strategy with policies which will help all companies seeking to grow through exports and investment. We also need all of government to get behind it with proper accountability to measure progress and take corrective action when things aren't working.”