Companies manufacture some better news for UK

British manufacturers have seen their orders books hit the highest level in three years as domestic demand continues to recover.

The bright news for the sector came on a day dominated by bleak economic data, with inflation soaring to a two-year high and government borrowing setting a record for the month of February.

Releasing its latest industrial trends survey, the CBI yesterday noted that the total order book balance had jumped to +5 this month from -8 in February, well above expectations for a reading of -6. Firms were boosted by growing demand in the UK, while expectations for growth rose to their highest level for four years.

But there was no let-up in price inflation as rising oil and commodity costs left a balance of +33 per cent of firms predicting price rises over the next quarter, up from +32 per cent last month and the highest level since July 2008.

Ian McCafferty, CBI chief economic adviser, said: "The manufacturing recovery is picking up pace, with firms predicting robust output growth over the next quarter. However, inflationary pressures in the manufacturing sector remain very acute."

CBI Scotland's assistant director David Lonsdale added: "Devolved public policy can assist Scottish manufacturers. We will therefore be watching the political parties' manifestos to see whether they are prioritising policies which encourage business investment and trade."

IHS Global Insight economist Howard Archer said the survey provided some "welcome good news on the UK economy" following the "disappointing" inflation and public finances data. He added that increasing prices would cause concern to Bank of England policymakers, who are trying to keep a lid on inflation.