The manufacturing sector looks to be improving but profits are threatened by rising costs according to the latest Industrial Trends survey from the CBI. The first three months to April show that orders are rising for British made goods overseas but as order books are still recovering from 30 year lows, total order books are still below normal.
The growth in orders is expected to continue over the next few months and production is expected to increase along with it. It is reflected in business confidence which continues to improve. Average unit costs are rising and though domestic prices were stable prices may increase in the next three months. Most firms say they working below capacity.
Firms have continued to de-stock but levels of finished goods have fallen in the quarter and are expected to stabilise in the next as is work in progress as the decline in raw materials slows down. Credit and finance are expected to continue to limit output over the next three months and even constrain exports. A majority of firms have plans to invest in training and retraining and in innovation.
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