By Daniel Hunter

Manufacturers have seen a significant rise in production levels in the three months to August, alongside markedly improved order books, according to the latest CBI monthly Industrial Trends Survey.

While firms have seen their positive expectations met on output, they anticipate an even greater upturn in the coming three months, the highest expected output figure since March 2011.

The survey of over 400 manufacturers found that total orders and export order books also rose sharply, with total orders at their highest since August 2011.

Output volumes rose across a significant number of sectors, with twelve of the sixteen sub-sectors reporting increases, and strong growth reported within some of the smaller sectors — building materials, metal manufacture and electrical goods.

Nonetheless, output prices are expected to remain flat over the next three months - the most subdued expectation since July 2012. Stock adequacy was broadly in line with its long-run average.

“Manufacturers have seen a real upturn in fortunes this quarter, as output grew at its fastest pace for two years," Stephen Gifford, CBI Director of Economics, said.

“Domestic and export orders have rebounded almost across the board, and manufacturers expect this strength to continue during the next three months.

“UK manufacturers seem to be experiencing a build-up in momentum, but risks in the global economy still mean that it won’t be plain-sailing for some time to come.”

Key findings — month to August:

· 25% of firms reported that total order books were above normal and 26% said they were below, giving a rounded balance of 0% - the highest figure since August 2011 (+1%)

· The balance for export order books (-7%) was the highest since June 2012 (-4%), with 18% reporting export orders above normal and 25% below

· Output volume rises were broad-based with twelve of the sixteen sub-sectors reporting rises, and strong growth especially within some of the smaller sectors — building materials, metal manufacture and electrical goods (balances of +49%, +51% and +51% respectively)

· Output volume growth matched the high expectations for the three months to August (+16% compared with expectations in May of +18%), with 37% of firms stating volume of output over the last three months had gone up, as opposed to 21% stating that it had fallen

· Firms believe output will increase at an even faster pace in the next three months (+25%), which compares favourably against the long-run average (+6%)

· Output prices over the next three months are expected to be flat (+0%), the lowest since July 2012 (-3%)

· Stock levels of finished goods (+15%) were broadly in line with their long-run average (+14%).

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