U.K Manufacturing Index Increases in November – CBI

British manufacturers reported their healthiest order books in November since before the Brexit vote and they are their most confident about the near-term outlook in nearly two years, an industry survey showed on Tuesday.

But the Confederation of British Industry also said manufacturers intend to raise prices at the fastest pace in almost three years, reflecting the sharp fall in the value of the pound since voters decided to leave the European Union in June.

U.K. manufacturing order books improved but output growth slowed in November, the latest Industrial Trends Survey from the Confederation of British Industry showed Tuesday.

About 23 percent of manufacturers said orders were above normal and 26 percent said they were below normal, giving a balance of -3 percent in November. The balance was expected to drop to -8 percent.

23% of manufacturers reported total order books to be above normal, and 26% said they  were below normal, giving a balance of -3%. This was above average (-15%), and similar to the balance seen through the summer

16% of firms said their export order books were above normal, and 27% said they were below normal, giving a balance of -11%. November’s level dropped on the previous month (-6%), but remained well above average (-19%)

28% of businesses said the volume of output over the past three months was up, and 24% said it was down, giving a balance of +4%

Manufacturers expect output to grow robustly in the coming quarter, with 38% predicting growth, and 15% a decline, giving a rounded balance of +24%. This is the highest since February 2015 (+25%)

Average selling prices are expected to rise sharply over the next three months (+19%), and at their fastest pace since January 2014 (+20%)

12% of firms said their present stocks of finished goods are more than adequate, whilst 10% said they were less adequate, giving a rounded balance of +3%. This was the lowest since July 2015 (+3%).

Rain Newton-Smith, CBI Chief Economist, said:

“It’s good to see manufacturers’ overall order books at healthy levels, and the outlook for output growth remaining robust as we head into Christmas.

“But the weak pound is beginning to make its mark, and prices are expected to rise, especially in the food and drink sector. On the flip side though, export orders remain above average.

“To bolster British industry, manufacturers want to see bold decisions in the Autumn Statement. A crystal clear focus is needed on infrastructure, investment and innovation from the Chancellor, so that firms are given the very best environment in which to grow, both at home and abroad.”