Optimism is rising among UK manufacturers, the latest quarterly Industrial Trends Survey from the CBI highlights.
The survey found over a quarter (27%) of firms claiming to be more optimistic about the general business situation than they were three months ago. With 12% of respondents saying they were less optimistic, the balance of +15% was the highest recorded by the survey since January 2015.
Based on responses from 461 manufacturers, the survey reveals that, during the three months to January, the volume of domestic orders rose at the fastest pace seen since July 2014.
It also found that export orders continued to grow, but at a lower rate than firms had anticipated.
Overall, demand is expected to grow strongly over the coming quarter, driven by both domestic and export orders, with production also expected to increase.
Commenting on the findings, CBI Chief Economist Rain Newton-Smith said: “UK manufacturers are firing on all cylinders right now with domestic orders up and optimism rising at the fastest pace in two years.”
She pointed out, however, that although the weaker pound is driving export optimism for the year ahead, it is also having a detrimental impact on costs for firms and will ultimately hit consumers.
Access to skilled labour was highlighted as a growing concern for businesses, with almost a quarter (24%) of respondents citing it as a factor likely to limit output in the coming months. That was the highest proportion recorded since July 1989.
Looking ahead, the next quarter is expected to see a rise in total new orders (+18%), with a balance of +14% of respondents expecting domestic orders to increase and +17% saying they think export orders will rise.
