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An employee welds a tension tube for a folding bicycle inside the Brompton in London.
UK factory orders have been boosted by strong demand from abroad. Photograph: Bloomberg via Getty Images
UK factory orders have been boosted by strong demand from abroad. Photograph: Bloomberg via Getty Images

UK manufacturing order books at strongest level since 1988, CBI says

This article is more than 6 years old

Global demand for British goods and weak pound bring sharp improvement in both total and export order books

Order books for Britain’s factories are at their strongest for almost 30 years as the weak pound and global growth bolsters demand for manufactured goods.

In a boost to the chancellor on the eve of the budget, the CBI’s monthly health check of industry showed a sharp improvement in both total and export order books.

The employers’ organisation said the climate for order books had not been better since August 1988 – when the boom of the late 1980s peaked. Food and drink firms and companies producing chemicals have experienced a particularly marked increase in demand.

Export order books – which have been helped by the fall in the value of sterling since the EU referendum in June 2016 – were the strongest since June 1995. The pickup in external demand has been led by the chemicals, electronics and transport sectors.

The CBI said strong order books had resulted in higher factory output, with firms confident that growth would continue over the coming three months.

Firms were still facing price pressures, but the CBI said these were not as pronounced as they had been earlier in the year, when the 15% drop in sterling was pushing up the cost of imported fuel and raw materials.

Although manufacturing accounts for only 10% of the economy, the strength of the CBI survey will boost the chances of UK growth picking up from its modest pace of expansion in the first nine months of 2017.

Anna Leach, the CBI’s head of economic intelligence, said: “UK manufacturers are once more performing strongly as global growth and the lower level of sterling continue to support demand. Output growth has picked up again, and export order books match the highest in more than 20 years.

“Nonetheless, uncertainty continues to hold back investment and cost pressures remain strong. Manufacturers will be hoping the budget brings some relief from the business rates burden in particular.”

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