Manufacturers’ order books recovered in August after three months of steady output, however, exports remain a weak spot.
According to the latest findings from the CBI Monthly Industrial Trends Survey, the stability in output is expected to continue into the next quarter.
Total orders recovered to “well above average” and there was an improvement in export orders also improved in just over half the sectors surveyed.
However, export orders remained below average in eight of the eighteen sub-sectors and presents a difficulty for firms trying to sell into markets abroad.
Manufacturers expect average prices to fall in the next three months after being flat last quarter, pointing to further pressure on margins.
“While the rebound in manufacturers’ total order books is encouraging, many firms are still struggling in overseas markets,” commented Rain Newton-Smith, Director of Economics at CBI.
“On the one hand, the strength of Sterling and cheaper energy are reducing factory input costs, but the strong pound is also hitting export prices and margins hard.
“With only four percent of the UK’s exports going to China, the country’s slowdown is not a direct cause of concern for our manufacturers, but it will make life harder for our firms in exposed sectors like metals and commodities.”