Manufacturing demand at 20-month peak says CBI

News Article - 24 August 2006
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UK manufacturing orders are at a 20-month high this month, according to figures released by the CBI.

Domestic demand has driven the improvement, with the level of export order books unchanged from July.

The capital goods sector - which includes shipbuilding, aerospace and industrial machinery – has experienced higher demand, as have consumer goods.

These figures offset a deterioration in the intermediate goods sector, which includes hand tools and industrial chemicals.

"The outlook remains encouraging for UK manufacturers. But it is disappointing that export orders have not improved more, given the current revival of the Eurozone economy, our principal export market," said the CBI's chief economic adviser Ian McCafferty.

"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.

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

A balance of 11 per cent of manufacturers expects the total volume of output to increase over the next three months.

This figure is slightly lower than in both June and July, but the pace of growth is similar to that seen over the first half of 2006.

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