Manufacturing orders at two-year high

23-08-2006

The British manufacturing industry is enjoying its highest levels of orders for almost two years, the Confederation of British Industry (CBI) has said.

Today's monthly manufacturing survey from the lobby group reports that the proportion of firms saying orders are below normal is at eight per cent, representing the best result since December 2004.

This more optimistic outlook is based upon an increased demand in the capital goods sector, the CBI says, which includes shipbuilding materials and industrial machinery, although it has been offset by a fall in consumer goods orders.

The proportion of manufacturers predicting that their output volumes will increase over the next quarter has fallen slightly compared to July's value, but more than one in ten firms, another two-year high, say they are in a position to raise their prices.

Ian McCafferty, chief economic adviser at the CBI, said that today's survey results are "encouraging"; although he expressed disappointment at the fact British exports had not kept pace with the Eurozone average.

"Manufacturers have absorbed surging energy and raw material costs for many months, which has meant a big squeeze on profits. With better demand, it is not surprising that more firms hope to pass these on in the form of higher prices," he said.

Mr McCafferty added: "However, with continuing intense international competition, opportunities to do so will remain limited."


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