Signs of manufacturing activity picking up

Published:  11 May, 2012

The UK manufacturing sector is showing signs of bouncing back from the fragile conditions seen at the end of 2011 and start of 2012, and sentiment has improved for the first time in a year, the CBI said recently.

Orders and output volumes showed modest increases in the three months to April, and momentum is expected to build further in the coming three months.
Ian McCafferty, CBI chief economic adviser, said: “With the acute fears over Europe and global demand subsiding somewhat since the start of 2012, sentiment about the general business situation has risen among manufacturers for the first time in a year.
“Firms have seen manufacturing demand and production picking up in the three months to April, and with expectations of a further strengthening in activity in the coming quarter, they’re increasing their stock-building and investment plans.
“Nevertheless, given Europe is still our biggest export market, the outlook for UK manufacturing will remain uncertain until the Eurozone crisis is resolved.”
In line with diminishing uncertainty about demand, firms plan to spend more over the next twelve months compared with the previous year on innovation. These balances are at their strongest since October 1997. Investment intentions for plant & machinery are also positive for the first time in a year, and the strongest since July 1997.
In keeping with strengthening output expectations, orders and sentiment, the past quarter has seen manufacturers stockpiling raw materials and finished goods, while the balance for stocks of work in progress is the strongest since July 1979.

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