Manufacturing Output Increases Again as Work of Companies Flat Out

By Brian Snelson (originally posted to Flickr as Final assembly) [CC BY 2.0 (http://creativecommons.org/licenses/by/2.0)], via Wikimedia Commons

According to a closely followed survey, manufacturing output managed to bounce back from a decline during the last quarter.

The industrial trends survey that was conducted by the Confederation of British Industry (CBI) revealed that the overall output is increasing, with a balance of 21 percent of companies reporting a rise for the quarter to January. The said increase was driven by stronger domestic demand, which reached its strongest since June 2014, while some exporters remained to enjoy the relative weakness of the sterling as orders reach their highest since 2011.

However, the CBI warned the market that capacity pressures are at currently their most intense levels ever since April 1989, with more and more companies that said that their order books are above average compared to any time since 1988.

The chief economist of CBI, Rain Newton-Smith, stated: “It’s good to see manufacturing going from strength to strength, with growth up and the buoyant global economy boosting export orders. But the past depreciation in sterling continues to leave its mark on firms’ 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.

“Capacity pressures are ramping up and skill shortages are a big concern, underlining the importance of establishing a future immigration system that provides companies with access to talent and labour.”

More companies– a balance of 29 percent – said that they were concerned that shortages of skills will affect their activity compared to any time since 1974. The long-term average level is currently only 13 percent.