Export orders boost for manufacturing sector

Published on Friday 22 September 2006 01:07

INCREASED export orders helped to improve manufacturing demand in September, the CBI said yesterday. Its monthly order book balance stood at minus five, up from August's minus eight, and while the figure remained negative, it was the best showing in 21 months.

"Considerable" demand for capital goods such as planes, ships and machinery have helped the UK's export orders improve," it said.

Manufacturers were more upbeat, with a balance of plus 14 expecting output to rise, up from last month's plus 11.

Meanwhile, fears increased costs would be passed on to consumers by factories and manufacturers appear to have eased. The CBI said a balance of plus eight companies expected to raise average prices in the next three months, significantly lower than last month's plus 13.

"Cost pressures from inputs such as energy have recently eased a little, but profit margins remain under strain," CBI chief economics adviser Ian McCafferty said.

"Overall, the sector is doing better than it has for some time, but concern remains."

Healthy momentum in manufacturing prompted some analysts to suggest the figures may give the Bank of England further ammunition for a rate rise in November. Howard Archer of Global Insight cautioned, however, that "a very real risk" remained that global growth will moderate significantly in coming months - which could slash demand, and warned the strong pound may hurt company profits.