By Claire West

UK manufacturers saw demand for their goods continue to improve in August, as overseas orders returned to normal levels, the CBI said today.

Responding to the latest CBI monthly Industrial Trends Survey, 21% of manufacturers said that total orders were above normal and 34% said they were below. The resulting rounded balance of -14% is the highest since August 2008 (-13%) and a slight improvement on July’s balance of -16%.

Export order books strengthened more noticeably, with 24% reporting them to above normal, and 24% below normal. That gives a rounded balance of -1%, compared with -12% in the July survey.

With overall demand for UK-made goods continuing to improve, manufacturers expect production to rise further over the next three months. 30% predict output will increase, while 20% anticipate a fall. The resulting balance of +10% is an improvement on expectations in July (+6%), with predictions for manufacturing production edging higher after weakening over the past two months.

But price pressures are ongoing within the manufacturing sector, with a balance of 11% of firms expecting to raise prices, compared to +5% in the previous survey. Meanwhile, stock levels adequacy was broadly unchanged (+1%) for the second month running, the balance is the lowest since June 2007 (-2%).

Lai Wah Co, CBI Head of Economic Analysis, said: “Prospects for the manufacturing sector remain very positive. Demand is steadily improving, helped by the revival of export orders after some weakness last month, and manufacturers expect slightly stronger production growth in the three months ahead.

“However, inflationary pressures within the sector have not fully faded, and firms are predicting a faster rise in output prices over the next quarter.”