CBI study shows manufacturing confidence building

Smaller manufacturers are planning to spend more on plant and machinery and take on staff, according to a survey out today.

Stephen Gifford: Investment cycle is starting to turn. Picture: Contributed

The CBI, which polled more than 300 small and medium-sized manufacturing businesses, said that as the economic recovery took hold, the investment cycle was “starting to turn”.

Its latest SME trends survey showed that total orders and output volumes increased in the three months to January. Domestic orders rose, while export orders fell.

However, in the coming quarter domestic and export orders are both expected to grow more strongly and production is set to rise further.

The upbeat outlook follow yesterday’s purchasing managers’ index (PMI), which found that manufacturing export growth reached a near three-year high in January as the sector continued its rebound.

New order growth came from North America, mainland Europe, Asia, Brazil, the Middle East and Scandinavia.

There was, however, a slight dip in the headline activity index to 56.7, from December’s reading of 57.2. Any figure above 50 denotes growth.

Rob Dobson, economist at Markit, which co-authors the PMI reports, said the sector had continued the robust upsurge in production seen at the tail end of 2013, with the broad-based improvement being felt at small business and large-scale producers alike.

“Although the pace of output expansion has cooled slightly in recent months, growth is still tracking at one of the highest rates in the 22-year survey history,” he said.

The CBI survey noted that firms had increased their headcounts during the past three months with numbers expected to “increase moderately” again in the coming quarter.

Stephen Gifford, CBI director of economics, said: “As the recovery takes hold, the investment cycle is starting to turn.

“It’s encouraging to see smaller manufacturers planning to boost investment, particularly in their plant, machinery and buildings.”