Strong demand from abroad has kept the manufacturing boom going, although the number of factories expecting to push up prices has hit a 34-year high.
A closely watched survey by the CBI shows that factories are reporting strong orders, with only a slight slowdown from the 30-year high in December and November.
The CBI is Britain’s largest industry lobby group, speaking on behalf of 190,000 businesses. It conducts a monthly survey of new orders, employment, exports, prices and expectations.
In its survey of 369 manufacturers, 27 per cent said that the level of new orders between mid-December and mid-January was above normal, while 13 per cent said that the level was below normal. The balance of 14 points was a slight drop from 17 the previous month, which was the joint-highest since August 1988.
Finn McLaughlin, of Capital Economics, said: “The balance remains well above its long-run average of -19 [and] the export orders balance rose to a near-record high.”
Advertisement
The robust figures add to evidence that manufacturers are benefiting from the global upswing in trade and the fall in the value of the pound.
However, more factories reported plans to increase their selling prices than at any time since January 1984, as they pass on the higher costs of raw materials, fuel and workers.
Rain Newton-Smith, the CBI’s chief economist, said: “The past depreciation in sterling continues to leave its mark on costs and margins. With expectations for factory gate price inflation at their highest in 30 years, the pressure on consumer prices looks set to persist.”
The CBI’s quarterly survey, released at the same time, showed that the proportion of manufacturers working at full capacity increased in the three months to January to 62 per cent, compared with 57 per cent in the three months to October. This is the highest level since 1998 and suggests that factories may struggle to keep pace if demand picks up further.