UK Edition
Manufacturers report highest orders for 30 years as investment on research rises
The order books of the UK's manufacturers are fuller than they have been for 30 years, according to a survey from the Confederation of British Industry.
Overall orders were at their highest level since 1988. A leap in exports appeared to driven by the rise with firms working in chemicals and electronics reporting greater overseas demand for their goods.
Just over a quarter of the nearly 400 firms that took part in the research reported that their export orders were higher than usual. This resulted in a rounded balance (those expecting improvement, minus those expecting a decline) of +20pc. That is the strongest score since June 1995.
Output from manufacturers had risen in most sectors too, including tobacco, pharmaceuticals and plastics.
However, the data implied that some manufacturers could be running at close to capacity and even risk slipping backwards; stocks were running at +2pc, well below the +13pc average. Expectations for output levels in the next three months were also at a 13-month low, at +13pc, down from +19pc in October.
Andrew Wishart of Capital Economics said that reports on order book levels "counterintuitively" tend to lag behind performance, rather than lead it. This might explain the disparity between output expectations and orders.
November's report of strong orders is seemingly at odds with the CBI's Quarterly Industrial Trends Survey, released in October, which suggested firms were getting less optimistic - but this sentiment is only measured quarterly.
The historic high in orders comes as investment figures for research and development (R&D) in the UK rose by £1.2bn in 2016, according to data released by the Office for National Statistics.
Businesses upped their investment in R&D by 5.6pc, compared the previous year, with a total spend of £22.2bn.
Pharmaceuticals remained the most important source of R&D investment, accounting for £4.1bn in 2016. This was followed by spending on motor parts and vehicles at £3.4bn, the area which saw the largest increase in spending, growing by £562m - equivalent to a 20pc hike.
Howard Archer of EY Item Club said that the weaker pound was helping manufacturers maintain "healthy" growth levels.
"A very competitive pound and healthy global demand are helping UK manufacturers competing in foreign markets. The weakened pound could also encourage some companies to switch to domestic sources for supplies, which would help manufacturers of intermediate products,” Mr Archer said.
People could "expect the sector to make a solid positive contribution to growth this year and next, contrary to what has been the case in recent years", said Mr Wishart.