Export orders grow says CBI

News Article - 26 January 2011
Category: Business

According to the CBI, manufacturing recovery is well on track thanks to growth in export orders.

Of 394 manufacturers responding to the January Quarterly Industrial Trends survey, 32 per cent experienced a rise in output over the last three months, whilst 16 per cent said it had fallen. This is equal to a balance of +16%, up from +9% in October.

This was driven primarily by a +13% growth in export orders; domestic demand did increase although the rise was more modest, at +9%. However, domestic demand growth was stronger than had been anticipated with a rise of +2%.

Expectations over the next quarter are positive with output expected to grow by around +17%, driven by another strong performance from export orders. A balance of +18% of firms expect export orders to increase, whilst domestic orders will remain roughly flat (-3%). The number of companies emphasising orders and sales as a significant constraint on output dropped to 68 per cent, the lowest since July 2007.

Despite improving economic conditions, manufacturers have raised output prices considerably during the last quarter. Average domestic and export prices increased at the fastest rate since October 2008, with a balance of +13% and +14% respectively. Price hikes in the next quarter are expected to accelerate sharply; a balance of +31% and +34% of firms respectively expect domestic prices and export prices to rise.

Ian McCafferty, chief economic adviser at the CBI: "Production has been boosted this quarter by a strengthening in both domestic and overseas demand and, over the next three months, companies expect further growth, driven by another rise in export orders. But manufacturers have come under intense pressure to pass on rising costs: they have increased prices markedly in this quarter, and expect to raise them at an even faster pace over the next three months."

Manufacturers must take proactive action to protect profit margins throughout 2011; whilst growth is expected it is not certain and the pressure to raise prices may directly affect demand. Access manufacturing and production software can assist in this task. The Finite Production Scheduling module ensures that operations are only scheduled when firms have the actual resources available to complete the project on time. This allows companies to spend more time balancing capacity and demand, improving overall efficiency and therefore profit margins.

For more information, please call Access on 0845 345 3300.

Article keywords: CBI, manufacturing recovery, export orders, Quarterly Industrial Trends survey, Ian McCafferty, Access manufacturing and production software, Finite Production Scheduling module

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