UK manufacturing output was stable over the first three months of 2016, according to the CBI’s latest quarterly survey of factory bosses.
The CBI’s quarterly gauge of factory output increased to +1 from -2 in the previous quarter – the best reading since last summer.
New orders continued to decline but at the same pace as in the previous quarter.
A slowdown in global trade and a slump in demand from the North Sea oil and gas industry has hit factory output in recent months.
The survey also revealed that British manufacturers are optimistic that domestic and overseas demand will improve in the coming months.
Of the firms surveyed, 21 percent reported a bigger order sheet, while 25 per cent said they took on less work.
“Firms’ outlook for the upcoming quarter is a little firmer. Both output and demand are expected to grow, with the latter underpinned by strong expectations for export orders,” the CBI said.
Rain Newton-Smith, director of economics at the CBI, said: “Manufacturing has yet to pick-up after a flat start to the year, with falling orders providing little impetus for production.”
He added: “The falling exchange rate should give some support to manufacturers, and investment intentions are strong. With the expected pick-up in exports, it’s likely that firms will be looking to increase capacity.”
Oliver Jones, assistant economist at Capital Economics, was quoted by City A.M as saying that “April’s survey offers hope of improvement to come,”
Jones added that given the results it appears that “manufacturers aren’t overly worried about the impact of June’s EU referendum,”
Samuel Tombs, UK economist at the consultancy Pantheon Macroeconomics, told The Guardian:
“In contrast to the message from other surveys, Brexit risk also does not appear to be dissuading investment.
“It is too soon to conclude, however, that the manufacturing sector is out of the woods. Sterling will bounce back if, as we expect, the UK votes to remain in the EU in June.
Meanwhile, the domestic market for manufactured goods likely will remain weak as growth in consumers’ real income slows in response to rising inflation and intensifying austerity.”